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What changed in BOSTON OMAHA Corp's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of BOSTON OMAHA Corp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+272 added−259 removedSource: 10-K (2024-03-27) vs 10-K (2023-03-24)

Top changes in BOSTON OMAHA Corp's 2023 10-K

272 paragraphs added · 259 removed · 210 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

52 edited+27 added−6 removed163 unchanged
Biggest changeWe are also exploring raising capital through BOAM to help expend our broadband operations both for these build for rent developments and other potential broadband acquisition and expansion opportunities. 2 Table of Contents Additional Opportunities for Growth In addition to our activities in outdoor billboards, surety insurance, broadband services, asset management and the various industries in which we have made minority investments, we will also consider other industries which offer the potential for predictable and attractive returns on invested capital.
Biggest changeConsequently, we plan to wind down the BFR Fund earlier than originally targeted by returning the uninvested cash on hand to BFR Fund partners and, as we sell the BFR Fund's entitled land assets, returning that capital to BFR Fund partners as well. ● In July 2023, we invested approximately $3 million in voting preferred stock of MyBundle.TV Inc., which we refer to as "MyBundle," a company serving the broadband industry. 2 Table of Contents Additional Opportunities for Growth In addition to our activities in outdoor billboards, broadband services, surety insurance, asset management and the various industries in which we have made minority investments, we will also consider other industries which offer the potential for predictable and attractive returns on invested capital.
Item 1. Business . Our Company Boston Omaha Corporation, which we refer to as “the Company,” “our Company,” “we,” “us” or “our,” commenced its current business operations in June 2015 and currently operates four separate lines of business: outdoor billboard advertising, surety insurance and related brokerage activities, broadband services and an asset management business.
Item 1. Business . Our Company Boston Omaha Corporation, which we refer to as “the Company,” “our Company,” “we,” “us” or “our,” commenced its current business operations in June 2015 and currently operates four separate lines of business: outdoor billboard advertising, broadband services, surety insurance and related brokerage activities, and an asset management business.
In addition to its homebuilding operations, DFH's subsidiaries provide mortgage loan origination and title insurance services to homebuyers. On January 25, 2021, Dream Finders Homes, Inc., a wholly owned subsidiary of DFH, completed its initial public offering and Dream Finders Homes, Inc. became a holding company and sole manager of DFH.
In addition to its homebuilding operations, DFH's subsidiaries provide mortgage loan origination and title insurance services to homebuyers. On January 25, 2021, Dream Finders Homes, Inc., a wholly owned subsidiary of DFH, completed its initial public offering and Dream Finders Homes, Inc. became a holding company and sole manager of DFH.
Upon completion of the initial public offering, our outstanding common units in DFH were converted into 4,681,099 shares of Class A common stock of Dream Finders Homes, Inc., and one of our subsidiaries purchased an additional 120,000 shares of Class A common stock in the initial public offering.
Upon completion of the initial public offering, our outstanding common units in DFH were converted into 4,681,099 shares of Class A common stock of Dream Finders Homes, Inc., and one of our subsidiaries purchased an additional 120,000 shares of Class A common stock in the initial public offering.
Between August and November 2020, we invested, through BOC Yellowstone, approximately $7.8 million through the purchase of 3,399,724 shares of Class B common stock and 7,719,779 non-redeemable private placement warrants, each warrant entitling us to purchase one share of Class A common stock at $11.50 per share.
Between August and November 2020, we invested, through BOC Yellowstone, approximately $7.8 million through the purchase of 3,399,724 shares of Class B common stock and 7,719,779 non-redeemable private placement warrants, each warrant entitling us to purchase one share of Class A common stock at $11.50 per share.
There were no amounts outstanding related to the revolving line of credit as of December 31, 2022. 11 Table of Contents Under the Term Loan, Link is required to comply with the following financial covenants: A consolidated leverage ratio for any test period ending on the last day of any fiscal quarter of Link (a) beginning with the fiscal quarter ended December 31, 2021 of not greater than 3.50 to 1.00, (b) beginning with the fiscal quarter ended December 31, 2022 of not greater than 3.25 to 1.00 and (c) beginning with the fiscal quarter ending December 31, 2023 and thereafter of not greater than 3.00 to 1.00.
There were no amounts outstanding related to the revolving line of credit as of December 31, 2023. 11 Table of Contents Under the Term Loan, Link is required to comply with the following financial covenants: A consolidated leverage ratio for any test period ending on the last day of any fiscal quarter of Link (a) beginning with the fiscal quarter ended December 31, 2021 of not greater than 3.50 to 1.00, (b) beginning with the fiscal quarter ended December 31, 2022 of not greater than 3.25 to 1.00 and (c) beginning with the fiscal quarter ended December 31, 2023 and thereafter of not greater than 3.00 to 1.00.
Broadband Services In April 2019, we established a broadband subsidiary, Fiber is Fast, LLC, which has changed its name to Boston Omaha Broadband, LLC, which we refer to as "BOB." In March 2020, our subsidiary, FIF AireBeam LLC, which we refer to as "AireBeam," acquired substantially all of the business assets of FibAire Communications, LLC, which we refer to as "FibAire," a rural broadband internet provider that serves over 8,000 customers in communities in southern Arizona with a high-speed fixed wireless internet service and is building an all fiber-to-the-home network in select Arizona markets.
Broadband Services In April 2019, we established a broadband subsidiary, Fiber is Fast, LLC, which has changed its name to Boston Omaha Broadband, LLC, which we refer to as "BOB." In March 2020, our subsidiary, FIF AireBeam LLC, which we refer to as "AireBeam," acquired substantially all of the business assets of FibAire Communications, LLC, which we refer to as "FibAire," a rural broadband internet provider that served over 8,000 customers in communities in southern Arizona with a high-speed fixed wireless internet service and is building an all fiber-to-the-home network in select Arizona markets.
Since 2015, we have raised capital through private investments, public offerings and a bank term loan entered into by Link with a commercial lender. 3 Table of Contents Our Relationship with Magnolia and Boulderado In their roles as general partners of MCF, Magnolia BOC I, LP, which we refer to as "MBOC I" and BP, Magnolia and Boulderado, through their ownership of Class A common stock and all of our Class B common stock, control approximately 44% of the aggregate voting power and, as a result, will for the foreseeable future likely be able to continue to control the election of our directors, determine our corporate and management policies and determine without the consent of our other stockholders the outcome of any corporate transaction or other matters submitted to our stockholders for approval, including potential mergers or acquisitions, asset sales and other significant corporate transactions.
Since 2015, we have raised capital through private investments, public offerings and a bank term loan entered into by Link with a commercial lender. 3 Table of Contents Our Relationship with Magnolia and Boulderado In their roles as general partners of MCF, Magnolia BOC I, LP, which we refer to as "MBOC I" and BP, Magnolia and Boulderado, through their ownership of Class A common stock and all of our Class B common stock, control approximately 42% of the aggregate voting power and, as a result, will for the foreseeable future likely be able to continue to effectively control the election of our directors, determine our corporate and management policies and determine without the consent of our other stockholders the outcome of any corporate transaction or other matters submitted to our stockholders for approval, including potential mergers or acquisitions, asset sales and other significant corporate transactions.
Since DFH’s initial public offering through December 31, 2022, we have sold all 4,801,099 shares of DFH Class A common stock for gross proceeds of approximately $81 million. ● In May 2018, through one of our subsidiaries, we invested approximately $19 million through the purchase of common stock of CB&T Holding Corporation, which we refer to as "CB&T," the privately-held parent company of Crescent Bank & Trust, Inc., which we refer to as "Crescent." Our investment now represents 15.6% of CB&T’s outstanding common stock.
Since DFH’s initial public offering through December 31, 2023, we have sold all 4,801,099 shares of DFH Class A common stock for gross proceeds of approximately $81 million. ● In May 2018, through one of our subsidiaries, we invested approximately $19 million through the purchase of common stock of CB&T Holding Corporation, which we refer to as "CB&T," the privately-held parent company of Crescent Bank & Trust, Inc., which we refer to as "Crescent." Our investment now represents 15.6% of CB&T’s outstanding common stock.
We paid a combined purchase price of over $240 million for these billboards and related assets. As of March 1, 2023, we operated approximately 4,000 billboard structures containing approximately 7,600 advertising faces, of which over 90 are digital displays. Surety Insurance. Since September 2015, through six acquisitions, we have acquired one insurance company (UCS) and five insurance brokerage firms.
We paid a combined purchase price of over $240 million for these billboards and related assets. As of March 1, 2024, we operated approximately 4,000 billboard structures containing approximately 7,600 advertising faces, of which over 90 are digital displays. Surety Insurance. Since September 2015, through six acquisitions, we have acquired one insurance company (UCS) and five insurance brokerage firms.
A minimum consolidated fixed charge coverage ratio of not less than 1.15 to 1.00 measured quarterly, based on rolling four quarters. The Company was in compliance with these covenants as of December 31, 2022. The Credit Agreement includes representations and warranties, reporting covenants, affirmative covenants, negative covenants, financial covenants and events of default customary for financings of this type.
A minimum consolidated fixed charge coverage ratio of not less than 1.15 to 1.00 measured quarterly, based on rolling four quarters. The Company was in compliance with these covenants as of December 31, 2023. The Credit Agreement includes representations and warranties, reporting covenants, affirmative covenants, negative covenants, financial covenants and events of default customary for financings of this type.
A bond producer can serve as an objective, external resource for evaluating a construction firm’s capabilities and, where necessary, can suggest improvements to help the construction firm meet a surety company’s underwriting requirements. Bond producers compete based on their experience, reputation, and ability to issue bonds on behalf of sureties.
A bond producer can serve as an objective, external resource for evaluating a construction firm’s capabilities and, where necessary, can suggest improvements to help the construction firm meet a surety company’s underwriting requirements. Bond producers compete based on their experience, reputation, and ability to issue bonds on behalf of sureties. Broadband Services.
In March 2020, AireBeam acquired substantially all the business assets of FibAire, a rural broadband internet provider. AireBeam provides over 8,000 subscribers in communities in southern Arizona with a high-speed fixed wireless internet service and is building an all fiber-to-the-home network in select Arizona markets.
In March 2020, AireBeam acquired substantially all the business assets of FibAire, a rural broadband internet provider. AireBeam provided high-speed internet to over 8,000 subscribers in communities in southern Arizona with a high-speed fixed wireless internet service and is building an all fiber-to-the-home network in select Arizona markets.
Our Acquisitions and Equity Investments Since June 2015, we have expended over $510 million in the acquisition of businesses in outdoor billboard advertising, broadband services, surety insurance and brokerage operations, investment in our asset management business, and in the purchase of minority equity interests in various businesses.
Our Acquisitions and Equity Investments Since June 2015, we have expended over $530 million in the acquisition of businesses in outdoor billboard advertising, broadband services, surety insurance and brokerage operations, investment in our asset management business, and in the purchase of minority equity interests in various businesses.
On December 6, 2021, Link entered into a Fourth Amendment to Credit Agreement (the "Fourth Amendment"), which modified the Credit Agreement by increasing the borrowing limit to $30 million and combining the outstanding balances under Term Loan 1 and Term Loan 2 as well as any incremental borrowings into a term loan ("Term Loan").
On December 6, 2021, Link entered into a Fourth Amendment to Credit Agreement (the "Fourth Amendment"), that modified the Credit Agreement by increasing the borrowing limit to $30 million and combining the outstanding balances under Term Loan 1 and Term Loan 2 as well as any incremental borrowings into a term loan ("Term Loan").
In December 2020, we acquired substantially all of the business assets of UBB, a rural broadband internet provider. UBB provides high-speed internet to over 10,000 subscribers in Salt Lake City, Park City, Ogden, Provo and surrounding communities.
In December 2020, we acquired substantially all of the business assets of UBB, a rural broadband internet provider. UBB provided high-speed internet to over 10,000 subscribers in Salt Lake City, Park City, Ogden, Provo and surrounding communities.
In December 2020, we acquired substantially all of the business assets of Utah Broadband, LLC, which we refer to as "UBB," a broadband internet provider that provides high-speed internet to over 10,000 customers throughout Utah.
In December 2020, we acquired substantially all of the business assets of Utah Broadband, LLC, which we refer to as "UBB," a broadband internet provider that provided high-speed internet to over 10,000 customers throughout Utah.
Nonetheless, future issuances of additional shares could cause immediate and substantial dilution to the net tangible book value of shares of our Class A common stock issued and outstanding immediately before such transaction. In addition, we may have sellers rollover a portion of their equity holdings into an equity holding in the newly acquired business.
Nonetheless, future issuances of additional shares could cause immediate and substantial dilution to the net tangible book value of shares of our Class A common stock issued and outstanding immediately before such transaction. In addition, we may have sellers roll over a portion of their equity holdings into an equity holding in the newly acquired business.
We believe that we are a leading outdoor billboard advertising company in the markets we serve in the Midwest. As of December 31, 2022, we operate approximately 4,000 billboards with approximately 7,600 advertising faces.
We believe that we are a leading outdoor billboard advertising company in the markets we serve in the Midwest. As of December 31, 2023, we operate approximately 4,000 billboards with approximately 7,600 advertising faces.
We compete with other global insurance and reinsurance providers, including but not limited to Travelers, Liberty Mutual, Zurich Insurance Group, Lloyds, and CNA Insurance Group, as well as numerous specialist, regional and local firms in almost every area of our business.
We compete with other global insurance and reinsurance providers, including but not limited to Travelers, Liberty Mutual, Zurich Insurance Group, CNA Insurance Group, and Chubb Ltd, as well as numerous specialist, regional and local firms in almost every area of our business.
In addition, we hold minority investments in commercial real estate management and brokerage services, a bank focused on servicing the automotive loan market, and a developer of private aviation infrastructure focused on building, leasing and managing business aviation hangars.
In addition, we hold minority investments in commercial real estate management and brokerage services, a bank focused on servicing the automotive loan market, a company serving the broadband industry, and a developer of private aviation infrastructure focused on building, leasing and managing business aviation hangars.
Since 2015, we have made minority investments in several different industries. ● Since September 2015, we have made a series of investments in commercial real estate, a commercial real estate management, brokerage and related services business as well as an asset management business.
Since 2015, we have made minority investments in several different industries. ● Since September 2015, we have made a series of investments in commercial real estate, a commercial real estate management, brokerage and related services business as well as an asset management business. We currently own 30% of Logic.
We have raised over $410 million in net proceeds through underwritten public offerings conducted in 2017, 2020 and 2021, our 2018 Private Placement, and through "at the market" offerings conducted between 2018 and 2022. Borrowing of money.
We have raised over $445 million in net proceeds through underwritten public offerings conducted in 2017, 2020 and 2021, our 2018 Private Placement, and through "at the market" offerings conducted between 2018 and 2023. Borrowing of money.
We acquired InfoWest for approximately $38.8 million in cash and issued to the co-founders of InfoWest 20% of the equity in the newly formed entity. In June 2022, UBB completed the acquisition of Strawberry Communications, LLC's internet services business for approximately $1.1 million. 4 Table of Contents Minority Investments.
We acquired InfoWest for approximately $38.8 million in cash and issued to the co-founders of InfoWest 20% of the equity in the newly formed entity. In June 2022, UBB completed the acquisition of Strawberry Communications, LLC's internet services business for approximately $1.1 million.
Other outdoor advertising solutions, including street furniture (for example, bus shelters and benches), transit and other new alternative advertising signs at sports stadiums, malls, airports and other locations account for approximately an additional estimated $1.6 billion i n revenues in 2021 according to industry sources. There is no concentration of industries to which we lease billboard space. Surety Insurance .
Other outdoor advertising solutions, including street furniture (for example, bus shelters and benches), transit and other new alternative advertising signs at sports stadiums, malls, airports and other locations account for approximately an additional estimated $2.3 billion in revenues in 2022 according to industry sources. There is no concentration of industries to which we lease billboard space. Surety Insurance .
Sky Harbour’s Class A common stock trades on the NYSE American under the symbol “SKYH” and its warrants to purchase Class A common stock trade under the symbol “SKYH.WS.” ● In September 2021, through one of our subsidiaries, we invested $55 million directly into SHG and received Series B preferred units, which we refer to "Sky Series B Preferred Units." Upon the successful consummation of the Sky Harbour business combination, this investment converted into 5,500,000 shares of Sky Harbour's Class A common stock based upon an assumed value of $10.00 per share.
The business combination was completed on January 25, 2022 and Yellowstone changed its name to Sky Harbour Group Corporation, which we refer to as “Sky Harbour.” Sky Harbour’s Class A common stock trades on the NYSE American under the symbol “SKYH” and its warrants to purchase Class A common stock trade under the symbol “SKYH.WS.” ● In September 2021, through one of our subsidiaries, we invested $55 million directly into SHG and received Series B preferred units, which we refer to "Sky Series B Preferred Units." Upon the successful consummation of the Sky Harbour business combination, this investment converted into 5,500,000 shares of Sky Harbour's Class A common stock based upon an assumed value of $10.00 per share.
Surety insurers are highly regulated and scrutinized, through legal requirements for regular financial, market conduct and operational audits, and other means, in order to conduct business in the estimated $7.3 billi on surety market, based on 2021 industry reports.
Surety insurers are highly regulated and scrutinized, through legal requirements for regular financial, market conduct and operational audits, and other means, in order to conduct business in the estimated $8.6 billi on surety market, based on 2022 industry reports.
As we continue to seek to expand our billboard business through acquisitions, we may seek to increase the funds available to us through this Credit Facility or with a different lender. Principal amounts under the Term Loan are payable in monthly installments according to a 15-year amortization schedule with principal payments that commenced on January 1, 2022.
As we continue to expand our billboard business through acquisitions, we may seek to increase the funds available to us through this Credit Facility or with a different lender. Principal amounts under the Term Loan are payable in monthly installments according to a 25-year amortization schedule.
Of the 440 employees, 15 employees in broadband operations, 3 employees in insurance services, and 2 employee in administrative or corporate related activities were part time. The rest of our employees were full time. None of our employees are subject to collective bargaining agreements. We believe that our relationship with our employees is good.
Of the 463 employees, 17 employees in broadband operations, 4 employees in insurance services, 2 employee in administrative or corporate related activities and 1 employee in asset management services were part time. The rest of our employees were full time. None of our employees are subject to collective bargaining agreements. We believe that our relationship with our employees is good.
In December 2021, we agreed to provide Sky Harbour an additional $45 million through the purchase of 4,500,000 shares of Class A common stock upon the closing of the Sky Harbour business combination, which was consummated in January 2022. ● We recently established a subsidiary within BOAM to operate a proposed build for rent business in which we would develop and own single family detached and/or townhomes for long term rental.
In December 2021, we agreed to provide Sky Harbour an additional $45 million through the purchase of 4,500,000 shares of Class A common stock upon the closing of the Sky Harbour business combination, which was consummated in January 2022. ● In 2021, we established the BFR Fund subsidiary within BOAM to operate a proposed build-for-rent business, focusing on developing, building, and managing single family detached and/or townhomes for long term rentals.
Outdoor billboards were estimated as a $5.5 billion market in the U.S. in 2021 based on industry trade journals.
Outdoor billboards were estimated as a $6.2 billion market in the U.S. in 2022 based on industry trade journals.
In January and February 2023, we sold 1,097,824 shares of our Class A common stock through the "at the market" offering program, raising gross proceeds of approximately $28.1 million. We currently expect that our current cash will be sufficient to fund existing operations for at least the next 12 months.
From January through April 2023, we sold 1,532,065 shares of our Class A common stock through the "at the market" offering program, raising gross proceeds of approximately $37.5 million. We currently expect that our current cash will be sufficient to fund existing operations for at least the next 12 months.
These funds are managed by 24th Street Asset Management, LLC, a subsidiary of 24th Street Holding Company, LLC, and focus on opportunities within secured lending and direct investments in commercial real estate. ● In December 2017, we invested $10 million in common units of Dream Finders Holdings LLC, which we refer to as "DFH," the parent company of Dream Finders Homes, LLC, a national home builder with operations in Colorado, Florida, Georgia, Maryland, North Carolina, South Carolina, Texas and Virginia.
These funds are managed by 24th Street, and focus on opportunities within secured lending and direct investments in commercial real estate. ● In December 2017, we invested $10 million in common units of Dream Finders Holdings LLC, which we refer to as "DFH," the parent company of Dream Finders Homes, LLC, a national home builder.
These funds are managed by 24th Street Asset Management, LLC, a subsidiary of 24th Street Holding Company, LLC, and focus on opportunities within secured lending and direct investments in commercial real estate. ● In December 2017, we invested $10 million in common units of DFH, the parent company of Dream Finders Homes, LLC, a national home builder with operations in Colorado, Florida, Georgia, Maryland, North Carolina, South Carolina, Texas and Virginia.
These funds are managed by 24th Street, and focus on opportunities within secured lending and direct investments in commercial real estate. ● In December 2017, we invested $10 million in common units of DFH, the parent company of Dream Finders Homes, LLC, a national home builder.
Employees As of March 1, 2023, we had 440 employees, of which 290 were in broadband operations, 88 were in billboard operations, 51 were in insurance services, 5 were in asset management services and 6 were in administrative or corporate related activities.
As of March 1, 2024, we had 463 employees, of which 304 were in broadband operations, 88 were in billboard operations, 56 were in insurance services, 9 were in asset management services and 6 were in administrative or corporate related activities.
The Term Loan is payable in full on December 6, 2028. During the first three years of the Term Loan, Link may prepay up to 10% of the loan principal in each year without paying any prepayment penalty. Otherwise, there is a prepayment penalty ranging between 3.0% and 0.5%. After three years, there is no prepayment penalty.
During the first three years of the Term Loan, Link may prepay up to 10% of the loan principal in each year without paying any prepayment penalty. Otherwise, there is a prepayment penalty ranging between 3.0% and 0.5%. After three years, there is no prepayment penalty. The Term Loan has a fixed interest rate of 4.00% per annum.
The Term Loan has a fixed interest rate of 4.00% per annum. The revolving line of credit loan facility has a $5 million maximum availability. Interest payments are based on the U.S. Prime Rate minus an applicable margin ranging between 0.65% and 1.15% dependent on Link’s consolidated leverage ratio.
The revolving line of credit loan facility has a $10 million maximum availability. Interest payments are based on the 30-day U.S. Prime Rate minus an applicable margin ranging between 0.65% and 1.15% dependent on Link’s consolidated leverage ratio. The revolving line of credit is due and payable on August 12, 2025.
In December 2021, we agreed to provide Sky Harbour an additional $45 million through the purchase of 4,500,000 shares of Class A common stock upon the closing of the Sky Harbour business combination, which was consummated in January 2022. ● We recently established a subsidiary within Boston Omaha Asset Management, LLC, which we refer to as “BOAM,” to operate a proposed build for rent business in which we would develop and own single family detached and/or townhomes for long term rental.
In December 2021, we agreed to provide Sky Harbour an additional $45 million through the purchase of 4,500,000 shares of Class A common stock upon the closing of the Sky Harbour business combination, which was consummated in January 2022. ● In 2021, we established the BFR Fund subsidiary within BOAM to operate a proposed build-for-rent business, focusing on developing, building, and managing single family detached and/or townhomes for long term rentals.
The significantly higher amount of information that can be transmitted per unit time of fiber over other transmission media is its most significant advantage. Also, an optical fiber offers low power loss, which allows for longer transmission distances. Fiber optic is generally less susceptible to electromagnetic interference, has greater capacity and weighs less than traditional metal wire connections.
Fiber optic cables have a much greater bandwidth than metal cables. The significantly higher amount of information that can be transmitted per unit time of fiber over other transmission media is its most significant advantage. Also, an optical fiber offers low power loss, which allows for longer transmission distances.
Also, fiber optic is made of glass, which can provide certain cost advantages over traditional copper wire. Optical fiber is more difficult and expensive to install than copper wire and special equipment is required to test optical fiber. Fiber optic is also highly susceptible to becoming cut or damaged during installation or construction activities.
Fiber optic is generally less susceptible to electromagnetic interference, has greater capacity and weighs less than traditional metal wire connections. Also, fiber optic is made of glass, which can provide certain cost advantages over traditional copper wire. Optical fiber is more difficult and expensive to install than copper wire and special equipment is required to test optical fiber.
We have also hired individuals responsible for maintaining and improving our information systems and for developing systems to protect both our information and that of our customers. In order to reduce the risk of unintended disclosure of customer information, our separate business groups operate different information systems for their customer interactions.
In order to reduce the risk of unintended disclosure of customer information, our separate business groups operate different information systems for their customer interactions.
We also operate ACS, SCS and Warnock, brokers with clients nationwide, and SSS, another surety insurance brokerage with clients concentrated in several Midwestern states. We seek to reduce our risk by limiting policy amounts, following extensive underwriting processes, reviewing dashboards of critical metrics, and purchasing reinsurance coverage.
As of December 31, 2023, ACS, Warnock and SSS were merged into SCS. We seek to reduce our risk by limiting policy amounts, following extensive underwriting processes, reviewing dashboards of critical metrics, and purchasing reinsurance coverage.
Upon the occurrence of an event of default the Lender may accelerate the loan. Upon the occurrence of certain insolvency and bankruptcy events of default the loan will automatically accelerate. As of December 31, 2022, we had approximately $25 million in unrestricted cash and $34 million in short-term treasury securities.
Upon the occurrence of an event of default the Lender may accelerate the loan. Upon the occurrence of certain insolvency and bankruptcy events of default the loan will automatically accelerate.
Driven by the rising demand for higher bandwidth and faster speed connections for a variety of industrial and residential purposes, fiber optic transmission is becoming more and more common in modern society. Fiber optic cables have a much greater bandwidth than metal cables.
Our AireBeam, UBB, InfoWest, and FFH businesses provide fiber connectivity to homes, business and community organizations in certain markets in Arizona, Florida, Nevada, Utah, and other locales. Driven by the rising demand for higher bandwidth and faster speed connections for a variety of industrial and residential purposes, fiber optic transmission is becoming more and more common in modern society.
We hope to continue to expand in Arizona, Florida, Nevada, Utah, and other locales both through acquisitions and constructing broadband services in larger residential developments under construction. 1 Table of Contents Minority Investments Since 2015, we have made minority investments in several different industries. ● Since September 2015, we have made a series of investments in commercial real estate, a commercial real estate management, brokerage and related services business as well as an asset management business.
Additionally, we will be returning capital to our fund partners during the wind-down process. 1 Table of Contents Minority Investments Since 2015, we have made minority investments in several different industries. ● Since September 2015, we have made a series of investments in commercial real estate, a commercial real estate management, brokerage and related services business as well as an asset management business.
The revolving line of credit is due and payable on August 12, 2023. Long-term debt included within our consolidated balance sheet as of December 31, 2022 consists of Link’s Term Loan borrowings of $28,499,270, of which $1,545,090 is classified as current.
Long-term debt included within our consolidated balance sheet as of December 31, 2023 consists of Link’s Term Loan borrowings of $27,337,766, of which $814,667 is classified as current.
We are also exploring raising capital through BOAM to help expand our broadband operations both for these build for rent developments and other potential broadband acquisition and expansion opportunities. 5 Table of Contents Industry Background We currently operate outdoor billboard advertising services, provide broadband services, and sell surety insurance products and have made minority investments in several commercial real estate management and brokerage companies, a bank focused on servicing the automotive loan market, a homebuilding company and a developer of private aviation infrastructure focused on building, leasing and managing business aviation hangars.
Consequently, we plan to wind down the BFR Fund earlier than originally targeted by returning the uninvested cash on hand to BFR Fund partners and, as we sell the BFR Fund's entitled land assets, returning that capital to BFR Fund partners as well. ● In July 2023, we invested approximately $3 million in voting preferred stock of MyBundle, a company serving the broadband industry. 5 Table of Contents Industry Background We currently operate outdoor billboard advertising services, provide broadband services, and sell surety insurance products and have made minority investments in several commercial real estate management and brokerage companies, a bank focused on servicing the automotive loan market, a homebuilding company and a developer of private aviation infrastructure focused on building, leasing and managing business aviation hangars.
We have bought parcels of land in Nevada which we hope to develop or repurpose for other uses. We have provided approximately $15 million of capital to finance the initial stages of these projects and are currently in the process of raising third party capital to be invested alongside our capital.
We invested approximately $15 million of capital to finance the initial acquisitions for these projects and subsequently raised third-party capital to be invested alongside our capital. The BFR Fund acquired land parcels in Nevada with the initial plan to develop, construct, and operate build-for-rent communities.
We have bought parcels of land in Nevada which we hope to develop or repurpose for other uses. We have provided approximately $15 million of capital to finance the initial stages of these projects and are currently in the process of raising third party capital to be invested alongside our capital.
We invested approximately $15 million of capital to finance the initial acquisitions for these projects and subsequently raised third-party capital to be invested alongside our capital. The BFR Fund acquired land parcels in Nevada with the initial plan to develop, construct, and operate build-for-rent communities.
Information Systems We rely on our information systems to manage our daily business activities, interact with customers and vendors, manage our digital billboard displays, and market our services. We have outsourced certain technology and business process functions to third parties and may increasingly do so in the future.
We have outsourced certain technology and business process functions to third parties and may increasingly do so in the future. We have also hired individuals responsible for maintaining and improving our information systems and for developing systems to protect both our information and that of our customers.
In addition to acquiring UCS, we have acquired five surety brokerage firms, The Warnock Agency, Inc., which we refer to as “Warnock,” Surety Support Services, Inc., which we refer to as “SSS,” South Coast Surety Insurance Services, LLC, which we refer to as “SCS,” and American Contracting Services, Inc., which we refer to as “ACS.” UCS and these brokerage firms provide us with both premium and commission revenue streams.
We also operate American Contracting Services, Inc., which we refer to as "ACS," South Coast Surety Insurance Services, LLC, which we refer to as "SCS," and The Warnock Agency, Inc., which we refer to as "Warnock," brokers with clients nationwide, and Surety Support Services, Inc., which we refer to as "SSS," another surety insurance brokerage with clients concentrated in several Midwestern states.
In addition, we have invested, through one of our subsidiaries, an aggregate of $6 million in 24th Street Fund I, LLC and 24th Street Fund II, LLC.
The shares issued in the transaction are unregistered and have no registration rights. The purchase agreement also provides for certain payments based on performance to receive the holdback amount and certain other potential earnout payments. In addition, we have invested, through one of our subsidiaries, an aggregate of $6 million in the 24th Street Funds.
Removed
We currently own 30% of Logic Real Estate Companies, LLC, which we refer to as "Logic," and approximately 49.9% of 24th Street Holding Company, LLC, both directly and indirectly through our ownership in Logic.
Added
In addition, over the last few years, we have also acquired additional smaller broadband businesses located in Utah. As of December 31, 2023, we have approximately 43,000 broadband customers. We hope to continue to expand in Arizona, Florida, Nevada, Utah, and other locales.
Removed
The business combination was completed on January 25, 2022 and Yellowstone changed its name to Sky Harbour Group Corporation, which we refer to as “Sky Harbour”.
Added
Asset Management In September 2017, we established an asset management subsidiary, Boston Omaha Asset Management, LLC, which we refer to as “BOAM,” designed to raise third-party capital and invest alongside Boston Omaha Corporation in specific assets and businesses that may offer attractive long-term returns on invested capital.
Removed
Once completed and stabilized, we expect that these properties will be financed with long term fixed rate debt capital supported by our and other potential third party equity investments. In addition to developing and managing these properties, we will seek to provide broadband services to these homes, providing us a second or third source of potential revenue from these developments.
Added
During 2021, we established a subsidiary, Fund One: Boston Omaha Build for Rent, LP ("BFR Fund"), within BOAM to operate a proposed build-for-rent business, focusing on developing, building, and managing single family detached and/or townhomes for long term rentals. In 2022, we started having initial conversations to raise third-party capital to "fund finance" the growth of our fiber business.
Removed
We currently own 30% of Logic and approximately 49.9% of 24th Street Holding Company, LLC, both directly and indirectly through our ownership in Logic. In addition, we have invested, through one of our subsidiaries, an aggregate of $6 million in 24th Street Fund I, LLC and 24th Street Fund II, LLC.
Added
In May 2023, we acquired 100% of the membership interests in 24th Street Asset Management LLC (“24th Street”), from the other members of 24th Street.
Removed
Once completed and stabilized, we expect that these properties will be financed with long term fixed rate debt capital supported by our and other potential third party equity investments. In addition to developing and managing these properties, we will seek to provide broadband services to these homes, providing us a second or third source of potential revenue from these developments.
Added
Prior to the acquisition, BOAM indirectly owned 48% of the membership interests of 24th Street. 24th Street is the manager of two funds, 24th Street Fund I, LLC and 24th Street Fund II, LLC, which we refer to as “the 24th Street Funds,” focusing on secured lending and direct investments in commercial real estate.
Removed
Broadband Services. Our AireBeam, UBB, InfoWest, and FFH businesses provide fiber connectivity to homes, business and community organizations in certain markets in Arizona, Florida, Nevada, Utah, and other locales.
Added
In recent years, BOAM has been staffed and equipped to support the growth of the fiber and real estate businesses.
Added
We have determined that the high costs and significant risks associated with "fund financing" based on current market conditions leads us to conclude that it would be more appropriate to pursue self-funding, bank debt, and other funding options for our fiber business at this time.
Added
As a result, we are winding down BOAM's operations and implementing cost cutting measures since it will now only manage real estate funds. For our funds under management (the 24th Street Funds and the BFR Fund), we plan to sell the assets at the highest price the market will bear while maintaining the business plans for these assets.
Added
We currently own 30% of Logic Real Estate Companies, LLC, which we refer to as "Logic." On May 1, 2023, our BOAM subsidiary acquired 100% of the membership interests in 24th Street, from the members of 24th Street other than BOAM, for cash and BOC Class A common stock valued at $5,016,494 in the aggregate.
Added
Prior to the transaction, BOAM indirectly owned 48% of the membership interests of 24th Street.
Added
The consideration consisted of $2,759,072 in cash at closing, an additional $1,254,102 in cash subject to holdback, and 45,644 shares of BOC Class A common stock (based on the average closing price of BOC Class A common stock for the 30 business day period ending two days before the closing date).
Added
However, challenges in the market, including the increase in interest rates and the inability to achieve what we believe are appropriate risk-adjusted returns, have led us to pursue selling the BFR Fund's entitled land assets to public homebuilders.
Added
In addition, each of Magnolia and Boulderado, as the holders of our Class B common stock, have the ability to limit our ability to take certain actions, notwithstanding the approval of a majority of our board of directors to take such action.
Added
In June 2023, InfoWest acquired from Pro Communication and Construction Services, LLC, which we refer to as “ProComm,” broadband construction equipment and related assets for a purchase price of approximately $2.9 million paid in cash.
Added
In October 2023, InfoWest acquired substantially all of the business assets of SunRiver Fiber Network from Cable Systems of Nevada, which we refer to as "Cable Systems," for a purchase price of approximately $4.4 million. 4 Table of Contents Minority Investments.
Added
On May 1, 2023, our BOAM subsidiary acquired 100% of the membership interests in 24th Street from the members of 24th Street other than BOAM for cash and BOC Class A common stock valued at $5,016,494 in the aggregate. Prior to the transaction, BOAM indirectly owned 48% of the membership interests of 24th Street.
Added
The consideration consisted of $2,759,072 in cash at closing, an additional $1,254,102 in cash subject to holdback, and 45,644 shares of BOC Class A common stock (based on the average closing price of BOC Class A common stock for the 30 business day period ending two days before the closing date).
Added
The shares issued in the transaction are unregistered and have no registration rights. The purchase agreement also provides for certain payments based on performance to receive the holdback amount and certain other potential earnout payments. In addition, we have invested, through one of our subsidiaries, an aggregate of $6 million in the 24th Street Funds.
Added
However, challenges in the market, including the increase in interest rates and the inability to achieve what we believe are appropriate risk-adjusted returns, have led us to pursue selling the BFR Fund's entitled land assets to public homebuilders.
Added
Fiber optic is also highly susceptible to becoming cut or damaged during installation or construction activities.
Added
Human Capital We believe we can continue to enhance stockholder value through our business practices that consider the long-term interests of all our stakeholders, including our employees. We aim to create a workplace where employees feel engaged, rewarded and empowered.
Added
Culture plays an important role in the way we conduct business and attract talent and, as such, we actively promote a culture of collaboration, creativity, inclusivity and ownership throughout the employee experience.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe market price for our Class A common stock may be influenced by many factors, many of which are out of our control, including those discussed in this “ Risk Factors ” section and elsewhere in this Annual Report and the following: ● our operating and financial performance and prospects; ● success of our competitors' products or services; ● regulatory or legal developments in the United States, especially changes in laws or regulations applicable to our products and services; ● additions or departures of key management personnel; ● market and industry perception of our success, or lack thereof, in pursuing our growth strategy; ● introductions or announcements of new products and services offered by us or significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors and the timing of such introductions or announcements; ● our ability to effectively manage our growth; ● our quarterly or annual earnings or those of other companies in the industries in which we participate; ● actual or anticipated changes in estimates to or projections of financial results, development timelines or recommendations by securities analysts; ● publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts; ● the public’s potential adverse reaction to our intention not to publish any guidance with respect to future earnings; ● the public’s reaction to our press releases, other public announcements or our competitors’ businesses; 31 Table of Contents ● market conditions in the billboard, insurance, broadband, real estate and other sectors in which we may operate as well as general economic conditions; ● our ability or inability to raise additional capital through the issuance of equity or debt or other arrangements and the terms on which we raise it; ● trading volume of our Class A common stock; ● the resale of Class A common stock held by our affiliates; ● changes in accounting standards, policies, guidance or principles; ● significant lawsuits, including stockholder litigation; ● general economic, industry and market conditions, including those resulting from inflation, geopolitical issues; natural disasters, severe weather events, terrorist attacks, epidemics and pandemics (such as the COVID-19 pandemic) and responses to such events; and ● accounting charges associated with reductions in the value of our investments in publicly traded securities and private companies.
Biggest changeThe market price for our Class A common stock may be influenced by many factors, many of which are beyond our control, including those discussed in this “ Risk Factors ” section and elsewhere in this Annual Report and the following: ● our operating and financial performance and prospects; ● success of our competitors' products or services; ● regulatory or legal developments in the United States, especially changes in laws or regulations applicable to our products and services, and changes in federal and state corporate tax laws; ● additions or departures of key management personnel; ● market and industry perception of our success, or lack thereof, in pursuing our growth strategy; ● introductions or announcements of new products and services offered by us or significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors and the timing of such introductions or announcements; ● our ability to effectively manage our growth; ● our quarterly or annual earnings or those of other companies in the industries in which we participate; ● actual or anticipated changes in estimates to or projections of financial results, development timelines or recommendations by securities analysts; ● publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts; ● the public’s potential adverse reaction to our intention not to publish any guidance with respect to future earnings; ● the public’s reaction to our press releases, other public announcements or our competitors’ businesses; 31 Table of Contents ● market conditions in the billboard, insurance, broadband, real estate and other sectors in which we may operate as well as general economic conditions; ● our ability or inability to raise additional capital through the issuance of equity or debt or other arrangements and the terms on which we raise it; ● trading volume of our Class A common stock; ● the resale of Class A common stock held by our affiliates; ● changes in accounting standards, policies, guidance or principles; ● significant lawsuits, including stockholder litigation; ● general economic, industry and market conditions, including those resulting from inflation, geopolitical issues; natural disasters, severe weather events, terrorist attacks, epidemics and pandemics (such as the COVID-19 pandemic) and responses to such events; ● accounting charges associated with reductions in the value of our investments in publicly traded securities and private companies; ● our income or losses in unconsolidated affiliates in which we have invested capital and our retention of specialized accounting for our investments in entities which qualify as investment companies and apply specialized industry accounting; and ● changes in other investment income or losses.
The key areas where we may face risks and uncertainties include: ● disruption of ongoing business, diversion of resources and of management time and focus from operating our business to acquisitions and integration challenges; ● our ability to achieve anticipated benefits of acquisitions by successfully marketing the service offerings of acquired businesses to our existing partners and customers, or by successfully marketing our existing service offerings to customers and partners of acquired businesses; ● the negative impact of acquisitions on our results of operations as a result of large one-time charges, substantial debt or liabilities acquired or incurred, litigation, amortization or write down of amounts related to deferred compensation, goodwill and other intangible assets, or adverse tax consequences, substantial depreciation or deferred compensation charges; ● the inability to generate sufficient revenue to offset acquisition costs; ● the need to ensure that we comply with all regulatory requirements in connection with and following the completion of acquisitions; ● the possibility of acquiring unknown or unanticipated contingencies or liabilities; ● retaining employees and clients and otherwise preserving the value of the assets of the businesses we acquire; ● the need to integrate each acquired business’s accounting, information technology, human resource and other administrative systems to permit effective management; and ● the need to implement or remediate appropriate controls, procedures and policies at companies that, prior to the acquisition, lacked these controls, procedures and policies.
The key areas where we may face risks and uncertainties include: ● disruption of ongoing business, diversion of resources and of management time and focus from operating our business to acquisitions and integration challenges; ● our ability to achieve anticipated benefits of acquisitions by successfully marketing the service offerings of acquired businesses to our existing partners and customers, or by successfully marketing our existing service offerings to customers and partners of acquired businesses; ● the negative impact of acquisitions on our results of operations as a result of large one-time charges, substantial debt or liabilities acquired or incurred, litigation, amortization or write down of amounts related to deferred compensation, goodwill and other intangible assets, adverse tax consequences, substantial depreciation or deferred compensation charges; ● the inability to generate sufficient revenue to offset acquisition costs; ● the need to ensure that we comply with all regulatory requirements in connection with and following the completion of acquisitions; ● the possibility of acquiring unknown or unanticipated contingencies or liabilities; ● retaining employees and clients and otherwise preserving the value of the assets of the businesses we acquire; ● the need to integrate each acquired business’s accounting, information technology, human resource and other administrative systems to permit effective management; and ● the need to implement or remediate appropriate controls, procedures and policies at companies that, prior to the acquisition, lacked these controls, procedures and policies.
In the future, if our ownership interest in Sky Harbour's common stock drops below 20%, we will no longer be able to record our investment under the equity method and will be required to include any unrealized gains or losses related to the change in Sky Harbour's stock price in our reported earnings on a mark to market basis.
In the future, if our ownership interest in Sky Harbour's common stock drops below 20%, we may no longer be able to record our investment under the equity method and will be required to include any unrealized gains or losses related to the change in Sky Harbour's stock price in our reported earnings on a mark to market basis.
If any of the following risks or uncertainties actually occur, our business, financial condition, results of operations, cash flow and prospects could be materially adversely affected. Additional risks or uncertainties not currently known to us, or that we deem immaterial, may also have a material adverse effect on our business financial condition, results of operations or prospects.
If any of the following risks or uncertainties actually occur, our business, financial condition, results of operations, cash flow and prospects could be materially adversely affected. Additional risks or uncertainties not currently known to us, or that we deem immaterial, may also have a material adverse effect on our business' financial condition, results of operations or prospects.
Best’s rating; ● if unfavorable financial, regulatory or market trends affect us, including excess market capacity; ● if our losses exceed our loss reserves; ● if we have unresolved issues with government regulators; ● if we are unable to retain our senior management or other key personnel; ● if our investment portfolio incurs significant losses; or ● if A.M.
Best’s rating; ● if unfavorable financial, regulatory, reinsurance or market trends affect us, including excess market capacity; ● if our losses exceed our loss reserves; ● if we have unresolved issues with government regulators; ● if we are unable to retain our senior management or other key personnel; ● if our investment portfolio incurs significant losses; or ● if A.M.
These factors include, but are not limited to: ● actual or anticipated fluctuations in Sky Harbour's reported results of operations or financial position, including due to a significant impairment of goodwill, intangible assets, or other long lived assets; ● recommendations and reports by securities analysts; ● Sky Harbour's ability to timely complete the construction of its various airport hangar developments and its ability to successfully lease these facilities at profitable rental rates; ● Sky Harbour’s ability to continue to access capital and debt on commercially reasonable terms; ● changes in the performance or market valuations of companies in Sky Harbour's industry; ● addition or departure of Sky Harbour's executive officers or other key personnel; 14 Table of Contents ● speculative trading activity by certain investors; ● the impact of inflation and any possible recession on Sky Harbour's operations, revenues, and ability to access financial markets as well as on the private jet hangar industry generally; ● fluctuations in the costs of construction, maintenance, and other materials and services; ● news reports relating to trends, concerns, economic or competitive developments, regulatory changes and other related issues in Sky Harbour’s industry or target markets; and ● announcement of developments and material events by Sky Harbour or its competitors.
These factors include, but are not limited to: ● actual or anticipated fluctuations in Sky Harbour's reported results of operations or financial position, including a significant impairment of goodwill, intangible assets, or other long lived assets; ● recommendations and reports by securities analysts; ● Sky Harbour's ability to timely complete the construction of its various airport hangar developments at originally projected costs and its ability to successfully lease these facilities at profitable rental rates; ● Sky Harbour’s ability to continue to access capital and debt on commercially reasonable terms; ● changes in the performance or market valuations of companies in Sky Harbour's industry; ● addition or departure of Sky Harbour's executive officers or other key personnel; 14 Table of Contents ● speculative trading activity by certain investors; ● the impact of inflation and any possible recession on Sky Harbour's operations, revenues, and ability to access financial markets as well as on the private jet hangar industry generally; ● fluctuations in the costs of construction, maintenance, and other materials and services; ● news reports relating to trends, concerns, economic or competitive developments, regulatory changes and other related issues in Sky Harbour’s industry or target markets; and ● announcement of developments and material events by Sky Harbour or its competitors.
The availability and cost of reinsurance are subject to prevailing market conditions, both in terms of price and available capacity, which can affect our business volume and profitability. In addition, reinsurance programs are generally subject to renewal on an annual basis.
The availability and cost of reinsurance is subject to prevailing market conditions, both in terms of price and available capacity, which can affect our business volume and profitability. In addition, reinsurance programs are generally subject to renewal on an annual basis.
As of March 20, 2023, no shares of preferred stock have been issued. 37 Table of Contents Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the United States are the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, our certificate of incorporation or our bylaws, (iv) any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or our bylaws or (v) any action asserting a claim against us that is governed by the internal affairs doctrine.
As of March 22, 2024, no shares of preferred stock have been issued. 37 Table of Contents Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the United States are the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, our certificate of incorporation or our bylaws, (iv) any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or our bylaws or (v) any action asserting a claim against us that is governed by the internal affairs doctrine.
A failure to comply with any such covenants could result in a default which, if not cured or waived, could permit acceleration of the relevant indebtedness. If we are unable to manage our interest rate risk effectively, our cash flows and operating results may suffer. Advances under Link's $5 million revolving line of credit bear interest at a variable rate.
A failure to comply with any such covenants could result in a default which, if not cured or waived, could permit acceleration of the relevant indebtedness. If we are unable to manage our interest rate risk effectively, our cash flows and operating results may suffer. Advances under Link's $10 million revolving line of credit bear interest at a variable rate.
We will continue to review our investment in Sky Harbour for an other-than-temporary impairment on a quarterly basis or upon the occurrence of certain events. If Sky Harbour's stock price drops below our carrying value of $8.15 per share for a sustained period of time, it will likely result in an impairment of our investment.
We will continue to review our investment in Sky Harbour for an other-than-temporary impairment on a quarterly basis or upon the occurrence of certain events. If Sky Harbour's stock price drops below our carrying value of $7.15 per share for a sustained period of time, it will likely result in an impairment of our investment.
Adequate sources of capital may not be available when needed on acceptable terms, or at all. If we raise additional capital by issuing additional equity securities, existing stockholders may be diluted. Acquisitions could also result in us incurring additional debt and contingent liabilities and fluctuations in quarterly results and expenses.
Adequate sources of capital may not be available when needed on acceptable terms, or at all. If we raise additional capital by issuing additional equity securities, the position of existing stockholders may be diluted. Acquisitions could also result in us incurring additional debt and contingent liabilities and fluctuations in quarterly results and expenses.
Despite our remediation of this material weakness in 2021, any failure in the future to maintain effective internal controls could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding of our operations.
Despite our remediation of this material weakness in 2023, any failure in the future to maintain effective internal controls could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding of our operations.
If our efforts to develop new products or expand in targeted markets are not successful, our results of operations could be materially and adversely affected. 27 Table of Contents Adverse economic factors, including recession, inflation, the COVID-19 pandemic, periods of high unemployment or lower economic activity could result in the sale of fewer surety policies than expected or an increase in frequency or severity of claims and premium defaults or both, which, in turn, could affect the growth and profitability of our surety insurance business.
If our efforts to develop new products or expand in targeted markets are not successful, our results of operations could be materially and adversely affected. 27 Table of Contents Adverse economic factors, including recession, inflation, periods of high unemployment or lower economic activity could result in the sale of fewer surety policies than expected or an increase in frequency or severity of claims and premium defaults or both, which, in turn, could affect the growth and profitability of our surety insurance business.
We currently account for our investment in Sky Harbour Class A common stock under the equity method. We have evaluated our investment in Sky Harbour as of December 31, 2022, and determined that there was not an other-than-temporary impairment.
We currently account for our investment in Sky Harbour Class A common stock under the equity method. We have evaluated our investment in Sky Harbour as of December 31, 2023, and determined that there was not an other-than-temporary impairment.
Although we have not currently borrowed any sums under this line of credit, and this line of credit is currently set to expire in August 2023, we may incur indebtedness under this line of credit in the future. Also, we may be required to refinance our debt at higher rates.
Although we have not currently borrowed any sums under this line of credit, and this line of credit is currently set to expire in August 2025, we may incur indebtedness under this line of credit in the future. Also, we may be required to refinance our debt at higher rates.
In addition to our review for possible impairment charges to securities we hold, we annually test goodwill for impairment and did so as of October 1, 2022. Based on our review at October 1, 2022, no impairment charge was required.
In addition to our review for possible impairment charges to securities we hold, we annually test goodwill for impairment and did so as of October 1, 2023. Based on our review at October 1, 2023, no impairment charge was required.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. 29 Table of Contents We identified a material weakness in the Company’s internal control over financial reporting as of December 31, 2020.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. 29 Table of Contents We identified a material weakness in the Company’s internal control over financial reporting existing as of December 31, 2022.
Similarly, our investments in other companies, including the home building and consumer auto lending markets, are highly regulated by federal and other governmental agencies. 24 Table of Contents We are subject to extensive insurance regulation, which may adversely affect our ability to achieve our business objectives.
Similarly, our investments in other companies, including the home building and consumer auto lending markets, are highly regulated by federal and other governmental agencies. 24 Table of Contents Our surety insurance business is subject to extensive insurance regulation, which may adversely affect our ability to achieve our business objectives.
Our results of operations are sensitive to changes in overall economic conditions that impact consumer and commercial spending, including discretionary spending and the financial impact to consumers and businesses from the COVID-19 pandemic and inflation. Future economic conditions such as employment levels, business conditions, interest rates and tax rates could reduce our revenues.
Our results of operations are sensitive to changes in overall economic conditions that impact consumer and commercial spending, including discretionary spending and the financial impact to consumers and businesses from inflation. Future economic conditions such as employment levels, business conditions, interest rates and tax rates could reduce our revenues.
These steps have included, among others, selling marketable securities that we might otherwise hold for the long-term and deploying our cash in non-investment assets.
These steps have included, among others, selling marketable securities that we might otherwise have held for the long-term and deploying our cash in non-investment assets.
Our executive officers and directors may experience a conflict of interest between their duties to us and to affiliated parties. Our Co-Chief Executive Officers, Adam K. Peterson and Alex B. Rozek, are each managing members of separate investment management entities that collectively own 21.6% of our Class A common stock and all of our Class B common stock.
Our executive officers and directors may experience a conflict of interest between their duties to us and to affiliated parties. Our Co-Chief Executive Officers, Adam K. Peterson and Alex B. Rozek, are each managing members of separate investment management entities that collectively own 19.5% of our Class A common stock and all of our Class B common stock.
Additionally, Mr. Peterson and entities managed by Magnolia together with Mr. Rozek and entities managed by Boulderado collectively own 1,018,660 shares of our Class A common stock and 1,055,560 shares of our Class B common stock, which converts on a one for one basis into an equivalent number of shares of our Class A common stock.
Additionally, Mr. Peterson and entities managed by Magnolia together with Mr. Rozek and entities managed by Boulderado collectively own 733,107 shares of our Class A common stock and 1,055,560 shares of our Class B common stock, which converts on a one for one basis into an equivalent number of shares of our Class A common stock.
In addition, the maximum number of shares of Class A common stock that may be delivered in satisfaction of awards will automatically increase on February 1st of each calendar year, for a period of not more than ten (10) years, beginning on February 1, 2024 and ending on (and including) February 1, 2032 (each, an “Evergreen Date”) in an amount such that both the total number of shares of stock available and previously issued under the 2022 Incentive Plan shall equal five percent (5%) or such lesser amount outstanding as may be determined by our Board of Directors on the December 31st immediately preceding the applicable Evergreen Date.
In addition, the maximum number of shares of Class A common stock that may be delivered in satisfaction of awards will automatically increase, on February 1st of each calendar year, for a period ending on (and including) February 1, 2032 (each, an “Evergreen Date”) in an amount such that both the total number of shares of stock available and previously issued under the 2022 Incentive Plan shall equal five percent (5%) or such lesser amount outstanding as may be determined by our Board of Directors on the December 31st immediately preceding the applicable Evergreen Date.
Subsequent to the closing of the Sky Harbour business combination, we distributed 75,000 shares of Sky Class A common stock to the outside directors of Yellowstone and 206,250 shares of Sky Class A common stock to an investor in the Yellowstone IPO. As of March 20, 2023, we owned 13,118,474 shares of Sky Harbour Class A common stock.
Subsequent to the closing of the Sky Harbour business combination, we distributed 75,000 shares of Sky Class A common stock to the outside directors of Yellowstone and 206,250 shares of Sky Class A common stock to an investor in the Yellowstone IPO. As of March 22, 2024, we owned 13,118,474 shares of Sky Harbour Class A common stock.
We may not be able to obtain reinsurance in acceptable amounts and/or on acceptable terms from entities with satisfactory creditworthiness. If we are unable to obtain new reinsurance facilities or to renew expiring facilities, our net exposures would increase.
We may not be able to obtain reinsurance in acceptable amounts and/or on acceptable terms from entities with satisfactory creditworthiness. If we are unable to obtain new reinsurance facilities or renew expiring facilities, our net exposures would increase and we may not be able to maintain certain customer accounts.
Factors, such as business revenue, economic conditions, the COVID-19 pandemic and other natural disasters, the volatility and strength of the capital markets and inflation can affect the business and economic environment. These same factors affect our ability to generate revenue and profits.
Factors, such as business revenue, economic conditions, natural disasters, the volatility and strength of the capital markets and inflation can affect the business and economic environment. These same factors affect our ability to generate revenue and profits.
Further, we may lack sufficient ownership of voting securities to impact, without the vote of additional equity holders, any matters submitted to stockholders or members of such business for a vote. We currently lack operational control over our investments in Sky Harbour, CB&T, 24th Street Holding Company, LLC and Logic.
Further, we may lack sufficient ownership of voting securities to impact, without the vote of additional equity holders, any matters submitted to stockholders or members of such business for a vote. We currently lack operational control over our investments in Sky Harbour, CB&T, MyBundle and Logic.
Our conclusion was based on several contributing factors, including: (i) our assessment that the underlying business and financial condition of Sky Harbour is favorable; (ii) the period of time for which the fair value has been less than the carrying value, (iii) the recovery of Sky Harbour's stock price since the beginning of 2023, and (iv) our ability and intent to hold the investment.
Our conclusion was based on several contributing factors, including: (i) our assessment that the underlying business and financial condition of Sky Harbour is favorable; (ii) the period of time for which the fair value was less than the carrying value during 2023, (iii) the recovery of Sky Harbour's stock price during the last few months of 2023, and (iv) our ability and intent to hold the investment.
As of March 20, 2023, MBOC I holds for the benefit of Massachusetts Institute of Technology ("MIT") and a pension fund managed by MIT 5,589,253 shares of our Class A common stock. In addition, the MIT affiliated pension fund separately reported that as of February 7, 2023, it owns an additional 2,603,572 shares of our Class A common stock.
As of March 22, 2024, MBOC I holds for the benefit of Massachusetts Institute of Technology ("MIT") and a pension fund managed by MIT 5,589,253 shares of our Class A common stock. In addition, the MIT affiliated pension fund separately reported that as of February 7, 2024, it owns an additional 2,444,473 shares of our Class A common stock.
In any such event, entities controlled by Boulderado or Magnolia would report a transfer of shares on a Form 4 filed with the SEC, which may affect the market price of our Class A common stock. 33 Table of Contents As of March 20, 2023, an additional 318,571 shares of our Class A common stock are owned by our officers and directors and their affiliates other than Messrs.
In any such event, entities controlled by Boulderado or Magnolia would report a transfer of shares on a Form 4 filed with the SEC, which may affect the market price of our Class A common stock. 33 Table of Contents As of March 22, 2024, an additional 407,484 shares of our Class A common stock are owned directly or indirectly by our officers and directors and their affiliates other than Messrs.
Our net loss from operations for the fiscal years ended December 31, 2022 and 2021 was approximately $5.3 million and $23.8 million, respectively. We have funded our operations to date principally from the sale of securities.
Our net loss from operations for the fiscal years ended December 31, 2023 and 2022 was approximately $8.9 million and $5.2 million, respectively. We have funded our operations to date principally from the sale of securities.
The costs of compliance with, and other burdens imposed by, such laws, regulations and policies that are applicable to us could have a material adverse effect on our business, financial condition and results of operations.
The costs of compliance with, and other burdens imposed by, such laws, regulations and policies that are applicable to us could have a material adverse effect on our business, financial condition and results of operations. Governmental regulations could adversely affect our business, financial condition, results of operations and prospects. Outdoor Billboard Advertising .
As of March 20, 2023, the closing price of Sky Harbour Class A common stock was $8.36 per share and we hold 13,118,474 shares of Sky Harbour Class A common stock and warrants to purchase 7,719,779 shares of Class A common Stock at a price of $11.50 per share, and the exercise price is subject to adjustment.
As of December 31, 2023, the closing price of Sky Harbour Class A common stock was $9.66 per share and we hold 13,118,474 shares of Sky Harbour Class A common stock and warrants to purchase 7,719,779 shares of Class A common Stock at a price of $11.50 per share, and the exercise price is subject to adjustment.
Due to the size of our percentage ownership interest in Sky Harbour's common stock, approximately 23% as of December 31, 2022, our investment is recorded under the equity method using the fair market value of Sky Harbour's Class A common stock as of the date of the business combination and we do not include any unrealized gains or losses related to the change in Sky Harbour's stock price in our reported earnings.
Due to the size of our percentage ownership interest in Sky Harbour's common stock, approximately 20% as of December 31, 2023, and our right to elect one of the seven members of Sky Harbour's Board of Directors, our investment is recorded under the equity method using the fair market value of Sky Harbour's Class A common stock as of the date of the business combination and we do not include any unrealized gains or losses related to the change in Sky Harbour's stock price in our reported earnings.
Our failure to successfully identify and complete future acquisitions of assets or businesses could reduce future potential earnings, reduce available cash and slow our anticipated growth. The acquisition of assets or businesses that we believe to be valuable to our business is an important component to our business strategy. Our experience in acquiring companies has been relatively limited to date.
Our failure to successfully identify and complete future acquisitions of assets or businesses could reduce future potential earnings, reduce available cash and slow our anticipated growth. The acquisition of assets or businesses that we believe to be valuable to our business is an important component to our business strategy.
Currently, MCF and BP collectively own all of our Class B common stock and entities managed by Magnolia and Boulderado own 21.6% of our Class A common stock, resulting in their holding 44.2% of the aggregate voting power of the company. As a result, Mr.
Currently, MCF and BP collectively own all of our Class B common stock and entities managed by Magnolia and Boulderado own 19.5% of our Class A common stock, resulting in their holding 41.8% of the aggregate voting power of the company. As a result, Mr.
The delivery of our services and products requires sales professionals and other personnel with substantial work experience in our lines of business. Workers may choose to pursue employment with our competitors or in fields that offer a more desirable work environment.
We may be unable to employ a sufficient number of key employees and other experienced or qualified workers. The delivery of our services and products requires sales professionals and other personnel with substantial work experience in our lines of business. Workers may choose to pursue employment with our competitors or in fields that offer a more desirable work environment.
As a result, we, like other direct insurance companies, write insurance policies which to some extent do not have the benefit of reinsurance protection. These gaps in reinsurance protection expose us to greater risk and greater potential losses.
As a result, we, like other direct insurance companies, write insurance policies which to some extent do not have the benefit of reinsurance protection. These gaps in reinsurance protection expose us to greater risk and greater potential losses. Our insurance employees could take excessive risks, which could negatively affect our financial condition and business.
Rozek is a director of Sky Harbour. 22 Table of Contents Disruptions to our information technology systems could disrupt our business operations which could have a material adverse effect on our business, prospects, results of operations, financial condition and/or cash flows. The operation of our business depends on our information technology systems.
Peterson is a member of the board of directors of Nelnet, Inc. 22 Table of Contents Disruptions to our information technology systems and any cybersecurity breaches could disrupt our business operations and have a material adverse effect on our business, prospects, results of operations, financial condition and/or cash flows. The operation of our business depends on our information technology systems.
Peterson and entities managed by Magnolia together control 29.6% of the aggregate voting power, and Mr. Rozek and entities managed by Boulderado together control 15.6% of the aggregate voting power.
Peterson and entities managed by Magnolia together control 28.5% of the aggregate voting power, and Mr. Rozek and entities managed by Boulderado together control 14.3% of the aggregate voting power.
With respect to such affiliates, there may be an absence of arms’ length negotiations with respect to the terms, conditions and consideration with respect to goods and services provided to or by us. Brendan J.
With respect to such affiliates, there may be an absence of arms’ length negotiations with respect to the terms, conditions and consideration with respect to goods and services provided to or by us. Brendan J. Keating, who is one of our directors, is also the Manager of both Logic and 24th Street and, along with Adam K.
Through March 20, 2023, we have sold a total of 1,105,711 shares of our Class A common stock in the ATM Program, for total gross proceeds of $28.3 million. Our 2022 Incentive Plan allows us to issue up to a total of 1,575,000 shares of Class A common stock (as defined under the Plan).
From January through April 2023, we sold 1,532,065 shares of our Class A common stock through the ATM Program, raising gross proceeds of approximately $37.5 million. Our 2022 Incentive Plan allows us to issue up to a total of 1,575,000 shares of Class A common stock (as defined under the Plan).
Some members of our executive management team have been involved in the day-to-day operation of companies in the outdoor billboard and insurance industries for only seven to eight years and in the fiber-to-the-home business for only two to three years.
Some members of our executive management team have limited experience in the day-to-day operations of the industries in which our businesses operate. Some members of our executive management team have been involved in the day-to-day operation of companies in the fiber-to-the-home business for only three to four years.
As of March 20, 2023, we had 9,073,890 shares of Class A common stock authorized but unissued under our certificate of incorporation.
As of March 22, 2024, we had 8,539,476 shares of Class A common stock authorized but unissued under our certificate of incorporation.
Link's current borrowings under the bank credit facility as of December 31, 2022 totaled $28,499,270, all of which represents a term loan. In addition, Link may incur additional indebtedness in the future.
Link's current borrowings under the bank credit facility as of December 31, 2023 totaled $27,337,766, all of which represents a term loan. The remaining balance of this term loan becomes due and payable in 2028. In addition, Link may incur additional indebtedness in the future.
We have also registered the 1,108,660 shares of Class A common stock held by Magnolia and Boulderado and their affiliates. Additionally, entities controlled by Magnolia and Boulderado have partners and members that may seek to have their interests redeemed and/or entities controlled by Boulderado and Magnolia may make a distribution to their partners and members or may dissolve such entities.
Additionally, entities controlled by Magnolia and Boulderado have partners and members that may seek to have their interests redeemed and/or entities controlled by Boulderado and Magnolia may make a distribution to their partners and members or may dissolve such entities.
The risk varies depending on events beyond our control, such as significant appreciation or depreciation in the market value of certain of our publicly traded holdings, adverse developments with respect to our ownership of certain of our subsidiaries, transactions involving the sale of certain assets and our participation in any partnership or other fund established to finance future broadband and real estate projects in which we may engage.
Although we do not currently hold investments at a value that would cause us to register under the Investment Company act, we could become subject to registration due to events beyond our control, such as significant appreciation or depreciation in the market value of certain of our publicly traded holdings, such as our interest in Sky Harbour, and adverse developments with respect to our ownership of certain of our subsidiaries, transactions involving the sale of certain assets and our participation in any partnership or other fund established to finance future broadband and real estate projects in which we may engage.
For example, settlements between major tobacco companies and all U.S. states and certain U.S. territories include a ban on the outdoor advertising of tobacco products. Alcohol products and other products may be future targets of advertising bans, and legislation, litigation or out-of-court settlements may result in the implementation of additional advertising restrictions that impact our business.
Alcohol products and other products may be future targets of advertising bans, and legislation, litigation or out-of-court settlements may result in the implementation of additional advertising restrictions that impact our business.
As a result of these limitations, we may be unable to offset future taxable income (if any) with losses, or our tax liability with credits, before such losses and credits expire. Accordingly, these limitations may increase our federal income tax liability. NOLs generated during 2018 and thereafter do not expire.
The use of our tax attributes will also be limited to the extent that we do not generate positive taxable income in future tax periods. As a result of these limitations, we may be unable to offset future taxable income (if any) with losses, or our tax liability with credits, before such losses and credits expire.
These markets are highly competitive, and many traditional providers of cable and wireless services have greater financial, marketing and human resources than us and may be able to offer additional products and services to our customers. In addition, new technologies may be developed which would provide an alternative to our fiber-to-the-home services we currently provide.
Our broadband services compete with other technologies, including traditional cable services as well as satellite services. These markets are highly competitive, and many traditional providers of cable and wireless services have greater financial, marketing, and human resources than us and may be able to offer additional products and services to our customers.
Limitations on the use of NOLs and other tax attributes could also increase our state tax liability. The use of our tax attributes will also be limited to the extent that we do not generate positive taxable income in future tax periods.
This could result in increased U.S. federal income tax liability for us if we generate taxable income in a future period. Limitations on the use of NOLs and other tax attributes could also increase our state tax liability.
Peterson and Rozek and are available for resale under Rule 144 under the Securities Act. A sale of a large number of the shares described above may have a depressive effect upon the price of our Class A common stock.
Peterson and Rozek and are available for resale under Rule 144 under the Securities Act. In addition, we have issued 80,912 shares of our Class A common stock under the 2022 Long-Term Incentive Plan and may issue additional shares in the future.
As technology changes continue in this market, new regulations may impose additional regulatory burdens and costs that could have an adverse impact on our business. In addition, certain of the other new markets and industries that we may choose to enter may be regulated by a variety of federal, state and local agencies.
We are unable to predict the outcome or effects of any of these potential actions or any other legislative or regulatory proposals on our businesses. In addition, certain of the other new markets and industries that we may choose to enter may be regulated by a variety of federal, state and local agencies.
Specifically, our management has concluded that the Company did not design and implement effective controls addressing the technical accounting complexities associated with the formation of and financial reporting for a special purpose acquisition company. This material weakness resulted in the restatement of our financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2020.
This material weakness did not require a restatement of our financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2022 as our evaluation concluded that the impact quantitatively and qualitatively was not material to any of the prior periods.
These regulations could limit our growth by putting constraints on the number, location and timing of billboards we wish to erect. New regulations and changes to existing regulations may also curtail our ability to expand our billboard business and adversely affect us by reducing our revenues or increasing our operating expenses.
New regulations and changes to existing regulations may also curtail our ability to expand our billboard business and adversely affect us by reducing our revenues or increasing our operating expenses. For example, settlements between major tobacco companies and all U.S. states and certain U.S. territories include a ban on the outdoor advertising of tobacco products.
To date, we have invested a total of $107.8 million in Sky Harbour. Our ownership of Sky Harbour Class A common stock and the warrants to acquire shares of Class A common stock are currently registered but were subject to prohibitions on trading prior to January 25, 2023 as part of the conditions to completing the Sky Harbour business combination.
To date, we have invested a total of $107.8 million in Sky Harbour. All the shares of Sky Harbour Class A common stock and Sky Harbour Warrants to purchase Class A common stock that we hold have been registered under the Securities Act.
In addition, Section 383 generally limits the amount of tax liability in any post-ownership change year that can be reduced by pre-ownership change tax credit carryforwards. This could result in increased U.S. federal income tax liability for us if we generate taxable income in a future period.
In addition, Section 383 generally limits the amount of tax liability in any post-ownership change year that can be reduced by pre-ownership change tax credit carryforwards. In addition, tax net operating loss carry forwards generated in years beginning after December 31, 2017 may be carried forward indefinitely but are only available to offset 80% of future taxable income.
While we intend to hold our current publicly-traded securities for the longer term, we may in the future choose to sell them for a variety of reasons resulting in realized losses or gains. Some members of our executive management team have limited experience in the day-to-day operations of the industries in which our businesses operate.
Also while we intend to hold our Sky Harbour Class A common stock for the longer term, we may elect to sell all or a portion of our holdings for a variety of reasons resulting in realized losses or gains.
We may experience significant competition and our competitors may have greater financial, marketing and human resources than us. Broadband Services . Our broadband services compete with other technologies, including traditional cable services as well as satellite services.
In addition to UCS, we also operate several surety insurance brokerage firms, and the surety insurance brokerage industry has relatively low barriers to entry. We may experience significant competition and our competitors may have greater financial, marketing and human resources than us. Broadband Services .
Governmental regulations could adversely affect our business, financial condition, results of operations and prospects, and we may not be successful in maintaining authority to issue surety insurance through UCS. Outdoor Billboard Advertising . Our billboard businesses are regulated by governmental authorities in the jurisdictions in which we operate.
Our billboard businesses are regulated by governmental authorities in the jurisdictions in which we operate. These regulations could limit our growth by putting constraints on the number, location and timing of billboards we wish to erect.
In 2021, we identified a material weakness in our internal control over financial reporting in connection with our accounting for certain complex features associated with our prior ownership in Yellowstone, a special purpose acquisition company.
In 2023, we identified a material weakness in our internal control over financial reporting in connection with our previous accounting for our investment in the 24th Street Funds under Accounting Standards Codification 323, Equity Method and Joint Ventures.
Removed
In 2019 and 2020, we derived a substantial portion of our surety insurance revenues from the sale of apartment and commercial lease rental guarantee bonds. Due to the COVID-19 pandemic, we stopped issuing these surety bonds. In addition to UCS, we also operate several surety insurance brokerage firms, and the surety insurance brokerage industry has relatively low barriers to entry.
Added
Such mark to market accounting could result in significant volatility in our earnings based on changes in Sky Harbour's public stock price.
Removed
The outbreak of COVID-19 may have materially negatively impacted and may continue to materially negatively impact certain portions of our business, financial performance and condition, operating results and cash flows.
Added
In addition, new technologies may be developed which would provide an alternative to our fiber-to-the-home services we currently provide.
Removed
However, the significance, extent and duration of such impact remains dependent on future developments that cannot be accurately predicted at this time, such as the continued severity, duration, transmission rate and geographic spread of COVID-19 in the United States, the extent and effectiveness of the containment measures taken, and the response of the overall economy, the financial markets and the population, particularly in areas in which we operate, once the current containment measures are lifted.
Added
Peterson and Alex B. Rozek, one of the three managing directors of BOAM. In addition, Alex B. Rozek is a director of Sky Harbour. Adam K. Peterson, Brendan J. Keating and Jeffrey C. Royal all serve as members of the board of directors of Nicholas Financial, Inc. and Adam K.
Removed
While the COVID-19 pandemic has had limited impact on our business to date, the rapid development and fluidity of this situation over the past three years precludes any prediction as to the ultimate adverse impact of COVID-19 in the future.
Added
As technology changes continue in this market, new regulations may impose additional regulatory burdens and costs that could have an adverse impact on our business. Any future legislative, judicial, regulatory or administrative actions may increase our costs or impose additional restrictions on our businesses, some of which may be significant.
Removed
As a result, while the impact of COVID-19 to this date has not materially adversely affected our business as a whole, we cannot provide an estimate of the overall impact of the COVID-19 pandemic on our business or certain business units.
Added
Specifically, our management concluded that our disclosure controls and procedures and internal control over financial reporting were not effective related to the risk assessment of our investment in unconsolidated entities who are required to apply specialized industry accounting.
Removed
Nevertheless, COVID-19 presents material uncertainty and risk with respect to our business, financial performance and condition, operating results, and cash flows. We may be unable to employ a sufficient number of key employees and other experienced or qualified workers.
Added
Specifically, the Company did not design and implement effective controls addressing the technical accounting complexities associated with companies who are required to apply investment company accounting guidance.
Removed
Keating, who is one of our directors, is also the Manager of both Logic and 24th Street Holding Company, LLC and one of the three general managers and an employee at BOAM. In addition, Alex B.
Added
Within our current filing, we have revised our Consolidated Balance Sheet and Consolidated Statement of Operations as of and for the year ended December 31, 2022, to reflect our proportionate share of reported earnings pursuant to investment company accounting requirements related to our previous investment in the 24th Street Funds.
Removed
The expansion of our UCS insurance business to a nationwide insurance company may create both short-term and long-term constraints on our UCS operations. We have expanded our insurance operations nationwide and seek to continue to grow our revenue, which may create additional burdens on our UCS personnel as we manage potentially significantly larger operations.
Added
In May 2022, we also registered 1,018,660shares of Class A common stock held by Magnolia and Boulderado and their affiliates. As of December 31, 2023, certain of our stockholders still hold 8,359,850 registered shares of our Class A common stock.
Removed
As a result, we anticipate we will likely need to hire additional personnel to assist the current management team in our expanded surety insurance operations, and we may not be successful in identifying and hiring qualified personnel on a timely basis, if at all. Our insurance employees could take excessive risks, which could negatively affect our financial condition and business.
Added
Although we have not registered the shares issued or available for issuance under the 2022 Long-Term Incentive Plan, we may do so in the future. A sale of a large number of the shares described above may have a depressive effect upon the price of our Class A common stock.
Removed
As a result of this material weakness, our management concluded that our internal control over financial reporting was not effective as of December 31, 2020.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLand leases related to the structures are typically paid in advance for periods ranging from one to twelve months. The lease contracts include those with fixed payments and those with escalating payments. Some of the lease contracts contain a base rent payment plus an additional amount up to a particular percentage of revenue.
Biggest changeI n connection with the acquisition of various billboard sites, we own a small percentage of these sites and in most instances lease the sites from third parties. Land leases related to the structures are typically paid in advance for periods ranging from one to twelve months. The lease contracts include those with fixed payments and those with escalating payments.
Item 2. Properties. Our corporate headquarters is located in Omaha, Nebraska. As of December 31, 2022, we maintained offices in various locations in the United States with leases expiring between 2023 and 2042. In connection with the acquisition of various billboard sites, we own a small percentage of these sites and in most instances lease the sites from third parties.
Item 2. Properties. Our corporate headquarters is located in Omaha, Nebraska. As of December 31, 2023, we maintained offices in various locations in the United States with leases expiring between 2024 and 2042.
In the opinion of our management, our properties are adequate and suitable for our business as presently conducted and are adequately maintained. We also own several parcels in Arizona used by our broadband business for storage of equipment.
Some of the lease contracts contain a base rent payment plus an additional amount up to a particular percentage of revenue. In the opinion of our management, our properties are adequate and suitable for our business as presently conducted and are adequately maintained. We also own several parcels in Arizona used by our broadband business for storage of equipment.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCertain of the grants to the employees are subject to vesting periods of up to three years from the date of grant and the grants to the four independent directors vest on June 30, 2023. Issuer Purchases of Equity Securities Not applicable.
Biggest changeCertain of the grants to the employees and the four independent directors are subject to vesting periods of up to three years from the date of grant. Issuer Purchases of Equity Securities Not applicable.
As of March 20, 2023, we also had 1,055,560 shares of Class B common stock held entirely by MCF and BP, as well as warrants held by MCF to purchase up to an additional 52,778 shares of our Class B common stock, warrants held by BP to purchase up to 51,994 shares of our Class B common stock, and warrants held by an unaffiliated investor to purchase up to 784 shares of our Class A common stock, each at exercise prices ranging from $8.00 to $10.00 per share. 39 Table of Contents Dividend Policy We have never declared or paid any cash dividends on our capital stock.
As of March 22, 2024, we also had 1,055,560 shares of Class B common stock held entirely by MCF and BP, as well as warrants held by MCF to purchase up to an additional 52,778 shares of our Class B common stock, warrants held by BP to purchase up to 51,994 shares of our Class B common stock, and warrants held by an unaffiliated investor to purchase up to 784 shares of our Class A common stock, each at exercise prices ranging from $8.00 to $10.00 per share. 40 Table of Contents Dividend Policy We have never declared or paid any cash dividends on our capital stock.
Commencing in January 2023, we issued stock grants under the 2022 Incentive Plan of our Class A common stock to our Chief Financial Officer, Chief Accounting Officer, the president of our billboard subsidiary and to the four independent directors totaling 20,896 shares.
Commencing in January 2023, we have issued stock grants under the 2022 Incentive Plan of our Class A common stock to our Chief Financial Officer, Chief Accounting Officer, the president of our billboard subsidiary, the president of our broadband subsidiary, three other employees, and the four independent directors totaling 80,912 shares.
This number does not include stockholders for whom shares are held in “nominee” or “street” name. As of March 20, 2023, there were 29,764,994 shares of Class A common stock outstanding.
This number does not include stockholders for whom shares are held in “nominee” or “street” name. As of March 22, 2024, there were 30,299,408 shares of Class A common stock outstanding.
As of March 20, 2023, the closing price per share of our common stock was $21.75, as reported by the NYSE. Holders of Our Common Stock As of March 20, 2023, there were approximately 88 holders of record of shares of our Class A common stock.
As of March 22, 2024, the closing price per share of our common stock was $16.64, as reported by the NYSE. Holders of Our Common Stock As of March 22, 2024, there were approximately 93 holders of record of shares of our Class A common stock.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeThe foregoing summary of the Credit Agreement and the transactions contemplated thereby does not purport to be a complete description and is qualified in its entirety by reference to the terms and conditions of the Credit Agreement and Security Agreement, copies of which are attached as Exhibit 10.1 and Exhibit 10.2, respectively to our Form 8-K as filed with the SEC on August 13, 2019, a First Amendment to Credit Agreement with the Lender as filed as Exhibit 10.1 on Form 8-K as filed with the SEC on October 29, 2019, a Second Amendment to Credit Agreement with the Lender as filed as Exhibit 10.1 on Form 8-K as filed with the SEC on June 30, 2020, a Third Amendment to Credit Agreement with the Lender as filed as Exhibit 10.1 on Form 8-K as filed with the SEC on August 24, 2021, a Fourth Amendment to Credit Agreement with the Lender as filed as Exhibit 10.1 on Form 8-K as filed with the SEC on December 9, 2021, and a Fifth Amendment to Credit Agreement with the Lender as filed as Exhibit 10.1 on Form 8-K as filed with the SEC on June 3, 2022.
Biggest changeThe foregoing summary of the Credit Agreement and the transactions contemplated thereby does not purport to be a complete description and is qualified in its entirety by reference to the terms and conditions of the Credit Agreement and Security Agreement, copies of which are attached as Exhibit 10.1 and Exhibit 10.2, respectively to our Form 8-K as filed with the SEC on August 13, 2019, a First Amendment to Credit Agreement with the Lender as filed as Exhibit 10.1 on Form 8-K as filed with the SEC on October 29, 2019, a Second Amendment to Credit Agreement with the Lender as filed as Exhibit 10.1 on Form 8-K as filed with the SEC on June 30, 2020, a Third Amendment to Credit Agreement with the Lender as filed as Exhibit 10.1 on Form 8-K as filed with the SEC on August 24, 2021, a Fourth Amendment to Credit Agreement with the Lender as filed as Exhibit 10.1 on Form 8-K as filed with the SEC on December 9, 2021, a Fifth Amendment to Credit Agreement with the Lender as filed as Exhibit 10.1 on Form 8-K as filed with the SEC on June 3, 2022, a Sixth Amendment to Credit Agreement with the Lender as filed as Exhibit 10.1 on Form 8-K as filed with the SEC on April 11, 2023, a Seventh Amendment to Credit Agreement with the Lender as filed as Exhibit 10.1 on Form 8-K as filed with the SEC on September 26, 2023, and an Eighth Amendment to Credit Agreement with the Lender as filed as Exhibit 10.1 on Form 8-K as filed with the SEC on February 16, 2024. 55 Table of Contents Investments in Yellowstone Acquisition Company and Sky Harbour In 2020, we acted as the sponsor for the initial public offering of Yellowstone and purchased 3,399,724 shares of Yellowstone Class B common stock and 7,719,799 private placement warrants at a combined cost of approximately $7.8 million.
Under the Term Loan, Link is required to comply with the following financial covenants: A consolidated leverage ratio for any test period ending on the last day of any fiscal quarter of Link (a) beginning with the fiscal quarter ended December 31, 2021 of not greater than 3.50 to 1.00, (b) beginning with the fiscal quarter ended December 31, 2022 of not greater than 3.25 to 1.00 and (c) beginning with the fiscal quarter ending December 31, 2023 and thereafter of not greater than 3.00 to 1.00, and a minimum consolidated fixed charge coverage ratio of not less than 1.15 to 1.00 measured quarterly, based on rolling four quarters.
Under the Term Loan, Link is required to comply with the following financial covenants: A consolidated leverage ratio for any test period ending on the last day of any fiscal quarter of Link (a) beginning with the fiscal quarter ended December 31, 2021 of not greater than 3.50 to 1.00, (b) beginning with the fiscal quarter ended December 31, 2022 of not greater than 3.25 to 1.00 and (c) beginning with the fiscal quarter ended December 31, 2023 and thereafter of not greater than 3.00 to 1.00, and a minimum consolidated fixed charge coverage ratio of not less than 1.15 to 1.00 measured quarterly, based on rolling four quarters.
Upon delivery of a placement notice (a “Placement Notice”) and upon the terms and subject to the conditions of the Sales Agreement, WFS will use reasonable efforts consistent with its normal trading and sales practices, applicable laws and the rules of the NYSE to sell the shares available under the ATM Program from time to time based upon our instructions for the sales, including price, time or size limits specified, and otherwise in accordance with, the terms of such Placement Notice.
Upon delivery of a placement notice (a “Placement Notice”) and upon the terms and subject to the conditions of the 2022 Sales Agreement, WFS will use reasonable efforts consistent with its normal trading and sales practices, applicable laws and the rules of the NYSE to sell the shares available under the ATM Program from time to time based upon our instructions for the sales, including price, time or size limits specified, and otherwise in accordance with, the terms of such Placement Notice.
In the future, if our ownership interest in Sky Harbour's Class A common stock drops below 20%, we will no longer be able to record our investment under the equity method and will be required to include any unrealized gains or losses related to the change in Sky Harbour's stock price in our reported earnings.
In the future, if our ownership interest in Sky Harbour's Class A common stock drops below 20%, we may no longer be able to record our investment under the equity method and will be required to include any unrealized gains or losses related to the change in Sky Harbour's stock price in our reported earnings.
We conduct and plan to continue to conduct our activities in such a manner as not to be deemed an investment company under the Investment Company Act. Therefore, no more than 40% of our total assets can be invested in investment securities, as such term is defined in the Investment Company Act.
We conduct and plan to continue to conduct our activities in such a manner as not to be deemed an investment company under the Investment Company Act of 1940 (the "Investment Company Act"). Therefore, no more than 40% of our total assets can be invested in investment securities, as such term is defined in the Investment Company Act.
Purchased Intangibles and Other Long-Lived Assets We amortize intangible assets with finite lives over their estimated useful lives, which range between two years and 50 years as follows: Years Customer relationships 10 to 15 Permits, licenses, and lease acquisition costs 10 to 50 Noncompetition and nonsolicitation agreements 5 Technology, trade names, and trademarks 10 to 20 Site location 15 Capitalized contract costs 10 Purchased intangible assets, including long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable.
Purchased Intangibles and Other Long-Lived Assets We amortize intangible assets with finite lives over their estimated useful lives, which range between five years and 50 years as follows: Years Customer relationships 10 to 15 Permits, licenses, and lease acquisition costs 10 to 50 Noncompetition and nonsolicitation agreements 5 Technology, trade names, and trademarks 10 to 20 Site location 15 Capitalized contract costs 10 Purchased intangible assets, including long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable.
The foregoing description of the 2022 Sales Agreement is not complete and is qualified in its entirety by reference to the full text of such agreement, a copy of which is filed as Exhibit 1.1 to the Current Report on Form 8-K dated December 8, 2022 and is incorporated herein by reference. 52 Table of Contents Link Credit Agreement On August 12, 2019, Link entered into a Credit Agreement (the “Credit Agreement”) with First National Bank of Omaha (the “Lender”) under which Link could borrow up to $40 million (the “Credit Facility”).
The foregoing description of the 2022 Sales Agreement is not complete and is qualified in its entirety by reference to the full text of such agreement, a copy of which is filed as Exhibit 1.1 to the Current Report on Form 8-K dated December 8, 2022 and is incorporated herein by reference. 54 Table of Contents Link Credit Agreement On August 12, 2019, Link entered into a Credit Agreement (the “Credit Agreement”) with First National Bank of Omaha (the “Lender”) under which Link could borrow up to $40 million (the “Credit Facility”).
Also, upon the closing of the business combination, we purchased an additional 4,500,000 shares of Sky Harbour Class A common stock for a purchase price of $45 million. ● Upon the closing of the Sky Harbour business combination, our Class B common stock converted to Class A common stock of Sky Harbour and our private placement warrants are now exercisable to purchase 7,719,779 shares of Class A common stock of Sky Harbour. ● Each Sky Harbour Warrant is exercisable for one share of Class A common stock at a price of $11.50 per share, subject to adjustment, with each Sky Harbour Warrant being exercisable through January 25, 2026.
Also, upon the closing of the business combination, we purchased an additional 4,500,000 shares of Sky Harbour Class A common stock for a purchase price of $45 million. ● Upon the closing of the Sky Harbour business combination, our Class B common stock converted to Class A common stock of Sky Harbour and our private placement warrants are now exercisable to purchase 7,719,779 shares of Class A common stock of Sky Harbour. ● Each Sky Harbour Warrant is exercisable for one share of Class A common stock at a price of $11.50 per share, subject to adjustment, with each Sky Harbour Warrant being exercisable through January 25, 2027.
Off-Balance Sheet Arrangements Except for our normal operating leases, we do not have any off-balance sheet financing arrangements, transactions or special purpose entities. 55 Table of Contents Critical Accounting Policies and Estimates The preparation of the consolidated financial statements and related notes to the consolidated financial statements requires us to make estimates that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities.
Off-Balance Sheet Arrangements Except for our normal operating leases, we do not have any off-balance sheet financing arrangements, transactions or special purpose entities. 57 Table of Contents Critical Accounting Policies and Estimates The preparation of the consolidated financial statements and related notes to the consolidated financial statements requires us to make estimates that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities.
While we intend to hold our current securities for the longer term, we may in the future choose to sell them for a variety of reasons resulting in realized losses or gains. Additionally, we have evaluated our investment in Sky Harbour as of December 31, 2022, and determined that there was not an other-than-temporary impairment.
While we intend to hold our current securities for the longer term, we may in the future choose to sell them for a variety of reasons resulting in realized losses or gains. Additionally, we have evaluated our investment in Sky Harbour as of December 31, 2023, and determined that there was not an other-than-temporary impairment.
Liquidity and Capital Resources Currently, we own billboards in Alabama, Arkansas, Florida, Georgia, Illinois, Iowa, Kansas, Missouri, Nebraska, Nevada, Oklahoma, South Dakota, Tennessee, Virginia, West Virginia and Wisconsin, a surety insurance company we acquired in December 2016, surety insurance brokerage firms we acquired in 2016, 2017 and 2021, broadband services providers whose assets we acquired in March 2020, December 2020 and April 2022, minority investments in commercial real estate management and brokerage services, a bank focused on servicing the automotive loan market and a developer of private aviation infrastructure focused on building, leasing and managing business aviation hangars.
Liquidity and Capital Resources Currently, we own billboards in Alabama, Arkansas, Florida, Georgia, Illinois, Iowa, Kansas, Missouri, Nebraska, Nevada, Oklahoma, South Dakota, Tennessee, Virginia, West Virginia and Wisconsin, a surety insurance company we acquired in December 2016, surety insurance brokerage firms we acquired in 2016, 2017 and 2021, broadband services providers whose assets we acquired in 2020, 2022 and 2023, minority investments in commercial real estate management and brokerage services, a bank focused on servicing the automotive loan market, and a developer of private aviation infrastructure focused on building, leasing and managing business aviation hangars.
For finite-lived intangible assets, the period over which the assets are expected to contribute directly to future cash flows is evaluated against our historical experience. Impairment losses are recognized only if the carrying amount exceeds its fair value. 56 Table of Contents We have acquired goodwill related to our various business acquisitions.
For finite-lived intangible assets, the period over which the assets are expected to contribute directly to future cash flows is evaluated against our historical experience. Impairment losses are recognized only if the carrying amount exceeds its fair value. 58 Table of Contents We have acquired goodwill related to our various business acquisitions.
We will continue to review our investment in Sky Harbour for an other-than-temporary impairment on a quarterly basis or upon the occurrence of certain events. If Sky Harbour's stock price drops below our carrying value of $8.15 per share for a sustained period of time, it will likely result in an impairment of our investment.
We will continue to review our investment in Sky Harbour for an other-than-temporary impairment on a quarterly basis or upon the occurrence of certain events. If Sky Harbour's stock price drops below our carrying value of $7.15 per share for a sustained period of time, it will likely result in an impairment of our investment.
Crescent is located in New Orleans and generates the majority of its revenues from indirect subprime automobile lending across the United States. 41 Table of Contents ● In October 2020, our subsidiary BOC Yellowstone served as sponsor for the underwritten initial public offering of a special purpose acquisition company named Yellowstone Acquisition Company.
Crescent is located in New Orleans and generates the majority of its revenues from indirect subprime automobile lending across the United States. 42 Table of Contents ● In October 2020, our subsidiary BOC Yellowstone served as sponsor for the underwritten initial public offering of a special purpose acquisition company named Yellowstone Acquisition Company.
The terms of the Sky Harbour business combination prohibited us from selling any of our securities in Sky Harbour prior to January 25, 2023 but has since expired. 54 Table of Contents We believe that our existing cash and short-term investments, funds available through the Credit Agreement Link entered into on August 12, 2019, as amended, and any funds that we may receive from cash flows from operations will be sufficient to meet working capital requirements and anticipated capital expenditures for the next 12 months.
The terms of the Sky Harbour business combination prohibited us from selling any of our securities in Sky Harbour prior to January 25, 2023 and has since expired. 56 Table of Contents We believe that our existing cash and short-term investments, funds available through the Credit Agreement Link entered into on August 12, 2019, as amended, and any funds that we may receive from cash flows from operations will be sufficient to meet working capital requirements and anticipated capital expenditures for the next 12 months.
In addition, we have made several billboard acquisitions on a smaller scale since that date. We believe that we are a leading outdoor billboard advertising company in the markets we serve in the Midwest. As of December 31, 2022, we operate approximately 4,000 billboards with approximately 7,600 advertising faces.
In addition, we have made several billboard acquisitions on a smaller scale since that date. We believe that we are a leading outdoor billboard advertising company in the markets we serve in the Midwest. As of December 31, 2023, we operate approximately 4,000 billboards with approximately 7,600 advertising faces.
The Company was in compliance with these covenants as of December 31, 2022. The Credit Agreement includes representations and warranties, reporting covenants, affirmative covenants, negative covenants, financial covenants and events of default customary for financings of this type. Upon the occurrence of an event of default the Lender may accelerate the loan.
The Company was in compliance with these covenants as of December 31, 2023. The Credit Agreement includes representations and warranties, reporting covenants, affirmative covenants, negative covenants, financial covenants and events of default customary for financings of this type. Upon the occurrence of an event of default the Lender may accelerate the loan.
No officer or director has any beneficial interest in any shares eligible for resale by the selling shareholders. 51 Table of Contents At The Market Offering Programs Starting in March 2018, we utilized our "at the market" offering that was part of our 2018 Shelf Registration Statement.
No officer or director has any beneficial interest in any shares eligible for resale by the selling shareholders. 53 Table of Contents At The Market Offering Programs Starting in March 2018, we utilized our "at the market" offering that was part of our 2018 Shelf Registration Statement.
On December 6, 2021, Link entered into a Fourth Amendment to Credit Agreement (the "Fourth Amendment"), which modified the Credit Agreement by increasing the borrowing limit to $30 million and combining the outstanding balances under Term Loan 1 and Term Loan 2 as well as any incremental borrowings into a term loan ("Term Loan").
On December 6, 2021, Link entered into a Fourth Amendment to Credit Agreement, which modified the Credit Agreement by increasing the borrowing limit to $30 million and combining the outstanding balances under Term Loan 1 and Term Loan 2 as well as any incremental borrowings into a term loan (“Term Loan”).
Quantitative and Qualitative Disclosures about Market Risk At December 31, 2022, we held no significant derivative instruments that materially increased our exposure to market risks for interest rates, foreign currency rates, commodity prices or other market price risks.
Quantitative and Qualitative Disclosures about Market Risk At December 31, 2023, we held no significant derivative instruments that materially increased our exposure to market risks for interest rates, foreign currency rates, commodity prices or other market price risks.
Link's existing credit facility imposes restrictions on Link that could increase our vulnerability to general adverse economic and industry conditions by limiting our flexibility in planning for and reacting to changes in our billboard, insurance, and broadband businesses.
Link’s existing credit facility imposes restrictions on Link that could increase our vulnerability to general adverse economic and industry conditions by limiting our flexibility in planning for and reacting to changes in our billboard, insurance, asset management, and broadband businesses.
Our operations are currently conducted entirely within the U.S.; therefore, we had no significant exposure to foreign currency exchange rate risk. 58 Table of Contents Recently Issued Accounting Pronouncements Management reviewed currently issued pronouncements during the year ended December 31, 2022, and believes that any other recently issued, but not yet effective, accounting standards, if currently adopted, would not have a material effect on the accompanying consolidated financial statements.
Our operations are currently conducted entirely within the U.S.; therefore, we had no significant exposure to foreign currency exchange rate risk. 60 Table of Contents Recently Issued Accounting Pronouncements Management reviewed currently issued pronouncements during the year ended December 31, 2023, and believes that any other recently issued, but not yet effective, accounting standards, if currently adopted, would not have a material effect on the accompanying consolidated financial statements.
Item 6. Selected Financial Data . Not applicable as we are a “smaller reporting company.” 40 Table of Contents Item 7 . Management ’ s Discussion and Analysis of Financial Cond ition and Results of Operations .
Item 6. Selected Financial Data . Not applicable as we are a “smaller reporting company.” 41 Table of Contents Item 7 . Management ’ s Discussion and Analysis of Financial Cond ition and Results of Operations .
How We Generate Our Revenues and Evaluate Our Business We currently generate revenues primarily through billboard advertising and related services, from the sale of surety insurance and related brokerage activities and by providing high-speed broadband services.
How We Generate Our Revenues and Evaluate Our Business We currently generate revenues primarily through billboard advertising and related services, from the sale of surety insurance and related brokerage activities, by providing high-speed broadband services, and asset management services.
In our surety business, direct cost of services includes commissions, premium taxes, fees and assessments, and losses and loss adjustment expenses. 43 Table of Contents Results of Operations Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 The following is a comparison of our results of operations for the year ended December 31, 2022, which we refer to as “fiscal 2022,” compared to the year ended December 31, 2021 which we refer to as “fiscal 2021.” Revenues.
In our surety business, direct cost of services includes commissions, premium taxes, fees and assessments, and losses and loss adjustment expenses. 44 Table of Contents Results of Operations Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 The following is a comparison of our results of operations for the year ended December 31, 2023, which we refer to as “fiscal 2023,” compared to the year ended December 31, 2022 which we refer to as “fiscal 2022.” Revenues.
There may also be a future impairment of our investment if our expectations about Sky Harbour's prospective results of operations and cash flows decline, which could be influenced by a variety of factors including adverse market conditions. Net Income Att ributable to Common Stockholders .
There may also be a future impairment of our investment if our expectations about Sky Harbour's prospective results of operations and cash flows decline, which could be influenced by a variety of factors including adverse market conditions. Net (Loss) Income Attributable to Common Stockholders.
However, our ability to resell any significant portion of these shares are limited by both the large number of shares and warrants we hold relative to the average trading volume of these securities as well as blackout periods which may prevent us from selling shares as one of our Co-Chief Executive Officers serves on Sky's Board of Directors.
However, our ability to resell any significant portion of these shares is limited by both the large number of shares and warrants we hold relative to the average trading volume of these securities as well as blackout periods which may prevent us from selling shares as one of our Co-Chief Executive Officers serves on Sky Harbour’s Board of Directors.
The increase in premiums earned was primarily due to increases in production throughout fiscal 2021 and fiscal 2022.
The increase in premiums earned was primarily due to increases in production throughout fiscal 2022 and fiscal 2023.
Due to the size of our percentage ownership interest in Sky Harbour's Class A common stock, our investment is recorded under the equity method using the fair market value of Sky Harbour's Class A common stock as of the date of the business combination and we do not include any unrealized gains or losses related to the change in Sky Harbour's stock price in our reported earnings.
Due to the size of our percentage ownership interest in Sky Harbour's Class A common stock and our right to elect one of the seven members of Sky Harbour's Board of Directors, our investment is recorded under the equity method using the fair market value of Sky Harbour's Class A common stock as of the date of the business combination and we do not include any unrealized gains or losses related to the change in Sky Harbour's stock price in our reported earnings.
Principal amounts under the Term Loan are payable in monthly installments according to a 15-year amortization schedule with principal payments commencing on January 1, 2022. The Term Loan is payable in full on December 6, 2028.
Principal amounts under the Term Loan were payable in monthly installments according to a 15-year amortization schedule with principal payments commencing on January 1, 2022. Starting July 1, 2023, principal amounts under the Term Loan are payable in monthly installments according to a 25-year amortization schedule. The Term Loan is payable in full on December 6, 2028.
Our conclusion was based on several contributing factors, including: (i) our assessment that the underlying business and financial condition of Sky Harbour is favorable; (ii) the period of time for which the fair value has been less than the carrying value, (iii) the recovery of Sky Harbour's stock price since the beginning of 2023, and (iv) our ability and intent to hold the investment.
Our conclusion was based on several contributing factors, including: (i) our assessment that the underlying business and financial condition of Sky Harbour is favorable; (ii) the period of time for which the fair value was less than the carrying value during 2023, (iii) the recovery of Sky Harbour's stock price during the last few months of 2023, and (iv) our ability and intent to hold the investment.
The key factors affecting our broadband operations results during fiscal 2022 were as follows: ● Total cost of revenues increased as a percentage of total segment operating revenues from 21.8% in fiscal 2021 to 26.3% in fiscal 2022.
The key factors affecting our broadband operations results during fiscal 2023 were as follows: ● Total cost of revenues increased as a percentage of total segment operating revenues from 26.3% in fiscal 2022 to 28.2% in fiscal 2023.
In December 2021, we agreed to provide Sky Harbour an additional $45 million through the purchase of 4,500,000 shares of Class A common stock upon the closing of the Sky Harbour business combination, which was consummated in January 2022. ● We recently established a subsidiary within BOAM to operate a proposed build for rent business in which we would develop and own single family detached and/or townhomes for long term rental.
In December 2021, we agreed to provide Sky Harbour an additional $45 million through the purchase of 4,500,000 shares of Class A common stock upon the closing of the Sky Harbour business combination, which was consummated in January 2022. ● In 2021, we established the BFR Fund subsidiary within BOAM to operate a proposed build-for-rent business, focusing on developing, building, and managing single family detached and/or townhomes for long term rentals.
We recognize revenues for written premium over the life of the surety bond and, as a result, increased sales activities are not fully reflected in the quarter in which the surety bond is issued. ● Insurance commissions generated by our surety brokerage operations decreased by 7.3% in fiscal 2022 when compared to fiscal 2021, mainly due to reduced production through outside insurance carriers as more bonds are placed directly with UCS. ● Commissions paid as a percentage of total segment operating revenues increased from 20.2% in fiscal 2021 to 21.9% in fiscal 2022, mainly due to increased production from non-affiliated insurance brokerage firms. ● Losses and loss adjustment expenses as a percentage of insurance revenues increased from 8.4% in fiscal 2021 to 11.5% in fiscal 2022.
We recognize revenues for written premium over the life of the surety bond and, as a result, increased sales activities are not fully reflected in the quarter in which the surety bond is issued. ● Insurance commissions generated by our surety brokerage operations decreased by 8.1% in fiscal 2023 when compared to fiscal 2022, mainly due to reduced production through outside insurance carriers. ● Commissions paid as a percentage of total segment operating revenues increased from 21.9% in fiscal 2022 to 24.8% in fiscal 2023, mainly due to increased production from non-affiliated insurance brokerage firms. ● Losses and loss adjustment expenses as a percentage of insurance revenues increased slightly from 11.5% in fiscal 2022 to 11.6% in fiscal 2023.
Total costs and expenses as a percentage of revenues decreased from 141.7% in fiscal 2021 to 106.4% in fiscal 2022. The key factors impacting costs and expenses across each of our businesses during fiscal 2022 were as follows: ● Cost of billboard revenues decreased as a percentage of billboard revenues from 38.4% in fiscal 2021 to 36.7% in fiscal 2022.
Total costs and expenses as a percentage of revenues increased from 106.4% in fiscal 2022 to 109.2% in fiscal 2023. The key factors impacting costs and expenses across each of our businesses during fiscal 2023 were as follows: ● Cost of billboard revenues decreased as a percentage of billboard revenues from 36.7% in fiscal 2022 to 35.3% in fiscal 2023.
The revolving line of credit loan facility has a $5,000,000 maximum availability. Interest payments are based on the U.S. Prime Rate minus an applicable margin ranging between 0.65% and 1.15% dependent on Link’s consolidated leverage ratio. The revolving line of credit is due and payable on August 12, 2023.
On September 22, 2023, the maximum availability under the revolving line of credit loan facility was increased from $5,000,000 to $10,000,000. Interest payments are based on the U.S. Prime Rate minus an applicable margin ranging between 0.65% and 1.15% dependent on Link’s consolidated leverage ratio. The new revolving line of credit is due and payable on August 12, 2025.
We run the risk of inadvertently being deemed to be an investment company that is required to register under the Investment Company Act of 1940 (the “Investment Company Act”) because a significant portion of our assets consists of investments in companies in which we own less than a majority interest.
Although we do not currently hold investments in an amount which would cause us to register under the Investment Company Act, we run the risk of inadvertently being deemed to be an investment company that is required to register under the Investment Company Act because a significant portion of our assets consists of investments in companies in which we own less than a majority interest.
The decrease was mainly related to lower commissions paid and ground rent expense as a percentage of billboard revenues. ● Cost of broadband revenues increased as a percentage of broadband revenues from 21.8% in fiscal 2021 to 26.3% in fiscal 2022.
The decrease was mainly related to lower ground rent expense as a percentage of billboard revenues. ● Cost of broadband revenues increased as a percentage of broadband revenues from 26.3% in fiscal 2022 to 28.2% in fiscal 2023.
These funds are managed by 24th Street Asset Management, LLC, a subsidiary of 24th Street Holding Company, LLC, and focus on opportunities within secured lending and direct investments in commercial real estate. ● In December 2017, we invested $10 million in common units of DFH, the parent company of Dream Finders Homes, LLC, a national home builder with operations in Colorado, Florida, Georgia, Maryland, North Carolina, South Carolina, Texas and Virginia.
These funds are managed by 24th Street, and focus on opportunities within secured lending and direct investments in commercial real estate. ● In December 2017, we invested $10 million in common units of DFH, the parent company of Dream Finders Homes, LLC, a national home builder.
Since the signing of the 2022 Sales Agreement, we sold 7,887 shares of Class A common stock in December 2022 for gross proceeds of approximately $205 thousand and 1,097,824 shares of our Class A common stock in January and February 2023 for gross sale proceeds of approximately $28.1 million.
Since the signing of the 2022 Sales Agreement, we sold 7,887 shares of Class A common stock in December 2022 for gross proceeds of approximately $205 thousand and 1,532,065 shares of our Class A common stock during fiscal 2023 for gross sale proceeds of approximately $37.5 million.
As of March 20, 2023, we hold 13,118,474 shares of Sky Harbour Class A common stock and 7,719,779 Sky Harbour Warrants. ● All of the shares of Sky Harbour Class A common stock that we own as well as the Sky Harbour Warrants and the shares of Sky Harbour Class A common stock underlying the Sky Harbour Warrants were registered with the SEC in 2022. ● All of the shares of Sky Harbour Class A common stock and Sky Harbour Warrants to purchase Class A common stock that we hold have been registered under the Securities Act.
As of December 31, 2023, we hold 13,118,474 shares of Sky Harbour Class A common stock and 7,719,779 Sky Harbour Warrants. ● All the shares of Sky Harbour Class A common stock and Sky Harbour Warrants to purchase Class A common stock that we hold have been registered under the Securities Act.
Long-term debt included within our consolidated balance sheet as of December 31, 2022 consists of Link’s Term Loan borrowings of $28,499,270, of which $1,545,090 is classified as current. There were no amounts outstanding related to the revolving line of credit as of December 31, 2022.
Long-term debt included within our consolidated balance sheet as of December 31, 2023 consists of Link’s Term Loan borrowings of $27,337,766, of which $814,667 is classified as current. There were no amounts outstanding related to the revolving line of credit as of December 31, 2023.
The key factors affecting our billboard operations results during fiscal 2022 were as follows: ● Ground rent expense decreased as a percentage of total segment operating revenues from 20.5% in fiscal 2021 to 19.7% in fiscal 2022. ● Commissions paid as a percentage of total segment operating revenues decreased from 9.5% in fiscal 2021 to 7.9% in fiscal 2022.
The key factors affecting our billboard operations results during fiscal 2023 were as follows: ● Ground rent expense decreased as a percentage of total segment operating revenues from 19.7% in fiscal 2022 to 18.6% in fiscal 2023. ● Commissions paid as a percentage of total segment operating revenues remained flat at 7.9% in fiscal 2022 and in fiscal 2023. ● Employee costs as a percentage of total segment operating revenues decreased from 17.1% in fiscal 2022 to 16.5% in fiscal 2023.
In April 2022, we acquired substantially all of the business assets of InfoWest, which are fiber and fixed wireless internet service providers with over 20,000 customers throughout Southern and Central Utah, Northern Arizona and Moapa Valley, Nevada. We hope to continue to expand in Arizona, Florida, Nevada, Utah, and other locales.
In April 2022, we acquired substantially all of the business assets of InfoWest, which are fiber and fixed wireless internet service providers with over 20,000 customers throughout Southern and Central Utah, Northern Arizona and Moapa Valley, Nevada. As of December 31, 2023, we have approximately 43,000 broadband customers.
The ATM Program pursuant to the 2022 Sales Agreement will automatically terminate upon the issuance and sale of all of the shares available for sale under the ATM Program through WFS.
The ATM Program pursuant to the 2022 Sales Agreement will automatically terminate upon the issuance and sale of all of the shares available for sale under the ATM Program through WFS. In addition, we may terminate the 2022 Sales Agreement with WFS without penalty upon 10 days’ notice.
Net cash used in operating activities was $5,165,165 during fiscal 2022 as compared to net cash provided by operating activities of $7,768,237 during fiscal 2021.
Net cash provided by operating activities was $16,059,125 during fiscal 2023 as compared to net cash used in operating activities of $5,165,165 during fiscal 2022.
The key factors impacting revenue across each of our businesses during fiscal 2022 were as follows: ● Net billboard rentals increased by 24.6% in fiscal 2022, when compared to fiscal 2021, reflecting the acquisition of billboards from Keleher and Missouri Neon, which accounted for approximately 13.9% of our billboard revenues in fiscal 2022, as well as an improvement in rental and occupancy rates across a number of our markets. ● Revenue from broadband services in fiscal 2022 increased 87.9% from fiscal 2021, mainly reflecting revenues generated from the InfoWest and Go Fiber acquisitions. ● Premiums earned from our UCS insurance subsidiary increased 38.5% in fiscal 2022 when compared to the fiscal 2021.
The key factors impacting revenue across each of our businesses during fiscal 2023 were as follows: ● Net billboard rentals increased by 9.4% in fiscal 2023, when compared to fiscal 2022, reflecting an improvement in rental and occupancy rates across a number of our markets as well as the acquisition of billboards from Elevation during the fourth quarter of fiscal 2022. ● Revenue from broadband services in fiscal 2023 increased 23.5% from fiscal 2022, mainly reflecting revenues generated from the InfoWest and Go Fiber acquisitions completed in April 2022 as well as subscriber growth across a number of our markets. ● Premiums earned from our UCS insurance subsidiary increased 30.8% in fiscal 2023 when compared to the fiscal 2022.
In fiscal 2022, total operating revenues increased by 87.9% when compared to fiscal 2021 mainly reflecting the revenues generated from the InfoWest and Go Fiber acquisitions.
In fiscal 2023, total operating revenues increased by 23.5% when compared to fiscal 2022 mainly reflecting the revenues generated from the InfoWest and Go Fiber acquisitions which were completed in April 2022.
At December 31, 2022, we had approximately $25 million in unrestricted cash and $34 million in short-term treasury securities. If future additional significant acquisition opportunities, expansion opportunities within our billboard and broadband services businesses, and possible further development under our build for rent business become available in excess of our currently available cash, U.S.
If future additional significant acquisition opportunities, expansion opportunities within our billboard and broadband services businesses, and possible further development under our build for rent business become available in excess of our currently available cash, U.S.
Net cash used in financing activities was $109,725,630 during fiscal 2022 as compared to net cash provided by financing activities of $64,644,655 during fiscal 2021.
Treasury securities. Net Cash Provided by (Used in) Financing Activities . Net cash provided by financing activities was $32,940,258 during fiscal 2023 as compared to net cash used in financing activities of $109,725,630 during fiscal 2022.
Our net loss from operations included $15,330,216 from non-cash amortization, depreciation and accretion expenses in fiscal 2022, as compared to $10,262,994 in fiscal 2021. 45 Table of Contents Other Income (Expense). In fiscal 2022, we had net other income of $9,019,038.
Our net loss from operations included $19,781,536 from non-cash amortization, depreciation and accretion expenses in fiscal 2023, as compared to $15,330,216 in fiscal 2022. 46 Table of Contents Other Income (Expense). In fiscal 2023, we had a net other loss of $294,060.
We recognize revenues for written premium over the life of the surety bond and, as a result, increased sales activities are not fully reflected in the quarter in which the surety bond is issued. ● Revenue from insurance commissions generated by our surety brokerage operations decreased by 7.3% in fiscal 2022 when compared to fiscal 2021, mainly due to reduced production through outside insurance carriers as more bonds are placed directly with UCS. ● Investment and other income at UCS increased from $339,061 in fiscal 2021 to $662,270 in fiscal 2022. 44 Table of Contents Expenses.
We recognize revenues for written premium over the life of the surety bond and, as a result, increased sales activities are not fully reflected in the quarter in which the surety bond is issued. ● Revenue from insurance commissions generated by our surety brokerage operations decreased by 8.1% in fiscal 2023 when compared to fiscal 2022, mainly due to reduced production through outside insurance carriers. ● Investment and other income at UCS and BOAM increased from $662,270 in fiscal 2022 to $2,156,199 in fiscal 2023, mainly due to the increase in interest rates over the past 12 to 18 months for assets held by UCS and the consolidation of 24th Street during the second quarter of fiscal 2023. 45 Table of Contents Expenses.
Net loss from operations in fiscal 2022 was $5,229,895, or 6.4% of total revenues, as compared to a net loss from operations of $23,766,869, or 41.7% of total revenues, in fiscal 2021.
Net loss from operations in fiscal 2023 was $8,852,403, or 9.2% of total revenues, as compared to a net loss from operations of $5,229,895, or 6.4% of total revenues, in fiscal 2022.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance.
The warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized in our statement of operations. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance.
Revenues increased within each our our businesses during fiscal 2022 when compared to fiscal 2021.
Revenues increased within each our our businesses, except for our surety brokerage operations, during fiscal 2023 when compared to fiscal 2022.
In fiscal 2022, there was a 24.6% increase in net billboard revenues from fiscal 2021, reflecting the acquisition of billboards from Keleher and Missouri Neon, which accounted for approximately 13.9% of our billboard revenues in fiscal 2022, as well as an improvement in rental and occupancy rates across a number of our markets.
In fiscal 2023, there was a 9.4% increase in net billboard revenues from fiscal 2022, reflecting an improvement in rental and occupancy rates across a number of our markets as well as the acquisition of billboards from Elevation during the fourth quarter of fiscal 2022.
The increase is mainly driven by the InfoWest and Go Fiber acquisitions as well as our FFH business. ● Cost of insurance revenues increased as a percentage of insurance revenues from 31.1% in fiscal 2021 to 35.6% in fiscal 2022.
The increase is mainly driven by the InfoWest and Go Fiber acquisitions completed in April 2022 as well as an increase in sales commissions and fuel costs. ● Cost of insurance revenues increased as a percentage of insurance revenues from 35.6% in fiscal 2022 to 38.5% in fiscal 2023.
The table below summarizes our cash flows in dollars for fiscal 2022 and fiscal 2021: 2022 2021 Net cash (used in) provided by operating activities $ (5,165,165 ) $ 7,768,237 Net cash provided by (used in) investing activities 87,862,907 (45,670,808 ) Net cash (used in) provided by financing activities (109,725,630 ) 64,644,655 Net (decrease) increase in cash, cash equivalents, and restricted cash $ (27,027,888 ) $ 26,742,084 Net Cash (Used in) Provided by Operating Activities.
The table below summarizes our cash flows in dollars for fiscal 2023 and fiscal 2022: 2023 2022 Net cash provided by (used in) operating activities $ 16,059,125 $ (5,165,165 ) Net cash (used in) provided by investing activities (64,252,691 ) 87,862,907 Net cash provided by (used in) financing activities 32,940,258 (109,725,630 ) Net (decrease) increase in cash, cash equivalents, and restricted cash $ (15,253,308 ) $ (27,027,888 ) Net Cash Provided by (Used in) Operating Activities.
The decrease is due to organic revenue growth as well as the impact from the Keleher and Missouri Neon acquisitions. ● General and administrative expenses increased slightly as a percentage of total segment operating revenues from 9.0% fiscal 2021 to 9.2% in fiscal 2022.
The decrease is due to organic revenue growth as well as the impact from the Elevation acquisition. ● General and administrative expenses decreased slightly as a percentage of total segment operating revenues from 9.2% fiscal 2022 to 9.1% in fiscal 2023. ● Depreciation and amortization expense increased by $494,042 and $258,879, respectively, from fiscal 2022.
In fiscal 2022, total operating revenues increased by 30.5% when compared to fiscal 2021, mainly due to increased earned premiums at our UCS insurance subsidiary. The key factors affecting our insurance operations results during fiscal 2022 were as follows: ● Premiums earned from our UCS insurance subsidiary increased 38.5% in fiscal 2022 when compared to fiscal 2021.
The key factors affecting our insurance operations results during fiscal 2023 were as follows: ● Premiums earned from our UCS insurance subsidiary increased 30.8% in fiscal 2023 when compared to fiscal 2022. The increase in premiums earned was primarily due to increases in production throughout fiscal 2022 and fiscal 2023.
This is compared to net income attributable to common stockholders of $52,748,177 in fiscal 2021, or income per share of $1.82, based on 29,046,514 diluted weighted average shares outstanding. 46 Table of Contents The following tables report results for the three segments in which we operate, billboards, broadband and insurance, for fiscal 2022 and fiscal 2021: Results of Billboard Operations For the Years Ended December 31, 2022 2021 Amount As a % of Segment Operating Revenues Amount As a % of Segment Operating Revenues Operating Revenues Billboard rentals, net $ 39,244,726 100.0 % $ 31,499,235 100.0 % Cost of Revenues Ground rents 7,753,495 19.7 % 6,458,703 20.5 % Utilities 1,672,420 4.3 % 1,258,236 4.0 % Commissions paid 3,103,413 7.9 % 3,005,012 9.5 % Other costs of revenues 1,866,299 4.8 % 1,372,883 4.4 % Total cost of revenues 14,395,627 36.7 % 12,094,834 38.4 % Gross margin 24,849,099 63.3 % 19,404,401 61.6 % Other Operating Expenses Employee costs 6,724,871 17.1 % 5,838,942 18.5 % Professional fees 521,377 1.3 % 670,897 2.1 % General and administrative 3,591,370 9.2 % 2,840,673 9.0 % Amortization 3,674,411 9.4 % 3,428,811 10.9 % Depreciation 4,581,316 11.7 % 3,584,767 11.4 % Accretion 196,099 0.5 % 120,589 0.4 % (Gain) loss on disposition of assets (175,262 ) (0.5 %) 175,254 0.6 % Total expenses 19,114,182 48.7 % 16,659,933 52.9 % Segment Income from Operations 5,734,917 14.6 % 2,744,468 8.7 % Interest expense, net (1,138,242 ) (2.9 %) (927,437 ) (2.9 %) Net Income Attributable to Common Stockholders $ 4,596,675 11.7 % $ 1,817,031 5.8 % Comparison of Fiscal 2022 to Fiscal 2021.
This is compared to net income attributable to common stockholders of $10,233,400 in fiscal 2022, or income per share of $0.34, based on 29,766,247 diluted weighted average shares outstanding. 47 Table of Contents The following tables report results for the following four segments in which we operate: billboards, broadband, insurance and asset management for fiscal 2023 and fiscal 2022: Results of Billboard Operations For the Years Ended December 31, 2023 2022 Amount As a % of Segment Operating Revenues Amount As a % of Segment Operating Revenues Operating Revenues Billboard rentals, net $ 42,940,369 100.0 % $ 39,244,726 100.0 % Cost of Revenues Ground rents 7,981,107 18.6 % 7,753,495 19.7 % Utilities 1,790,349 4.2 % 1,672,420 4.3 % Commissions paid 3,409,923 7.9 % 3,103,413 7.9 % Other costs of revenues 1,955,438 4.5 % 1,866,299 4.8 % Total cost of revenues 15,136,817 35.2 % 14,395,627 36.7 % Gross margin 27,803,552 64.8 % 24,849,099 63.3 % Other Operating Expenses Employee costs 7,072,960 16.5 % 6,724,871 17.1 % Professional fees 804,203 1.9 % 521,377 1.3 % General and administrative 3,902,279 9.1 % 3,591,370 9.2 % Depreciation 5,075,358 11.8 % 4,581,316 11.7 % Amortization 3,933,290 9.1 % 3,674,411 9.4 % Accretion 199,211 0.5 % 196,099 0.5 % Loss (gain) on disposition of assets 206,832 0.5 % (175,262 ) (0.5 %) Total expenses 21,194,133 49.4 % 19,114,182 48.7 % Segment Income from Operations 6,609,419 15.4 % 5,734,917 14.6 % Interest expense, net (956,251 ) (2.2 %) (1,138,242 ) (2.9 %) Net Income Attributable to Common Stockholders $ 5,653,168 13.2 % $ 4,596,675 11.7 % Comparison of Fiscal 2023 to Fiscal 2022.
The increase is mainly due to the InfoWest and Go Fiber acquisitions and hiring within our FFH business. ● Professional fees as a percentage of total segment operating revenues decreased from 5.0% in fiscal 2021 to 2.3% in fiscal 2022.
The increase is mainly due to the InfoWest and Go Fiber acquisitions as well as hiring within our other broadband businesses. ● Professional fees as a percentage of total segment operating revenues remained flat at 2.3% in fiscal 2022 and in fiscal 2023. ● General and administrative expenses as a percentage of total segment operating revenues increased from 18.1% in fiscal 2022 to 20.1% in fiscal 2023.
We had net income attributable to common stockholders in the amount of $7,139,548 in fiscal 2022, or income per share of $0.24, based on 29,766,247 diluted weighted average shares outstanding.
We had a net loss attributable to common stockholders in the amount of $7,004,009 in fiscal 2023, or a loss per share of $0.23, based on 31,092,850 diluted weighted average shares outstanding.
Net other income included a gain of $24,977,740 related to the deconsolidation of Yellowstone (see Note 8 to the consolidated financial statements for further discussion), $1,837,211 related to the remeasurement of Yellowstone's public warrants from January 1, 2022 to January 25, 2022, and interest and dividend income of $434,941.
Net other income included a gain of $24,977,740 related to the deconsolidation of Yellowston e, $4,085,040 mainly related to our investment in the 24th Street Funds, $1,837,211 related to the remeasurement of Yellowstone's public warrants from January 1, 2022 to January 25, 2022, and interest and dividend income of $434,941.
The increase in amortization expense is mainly driven by the InfoWest and Go Fiber acquisitions. 48 Table of Contents Results of Insurance Operations For the Years Ended December 31, 2022 2021 Amount As a % of Segment Operating Revenues Amount As a % of Segment Operating Revenues Operating Revenues Premiums earned $ 10,649,089 79.7 % $ 7,686,400 75.1 % Insurance commissions 2,050,838 15.3 % 2,212,849 21.6 % Investment and other income 662,270 5.0 % 339,061 3.3 % Total operating revenues 13,362,197 100.0 % 10,238,310 100.0 % Cost of Revenues Commissions paid 2,934,022 21.9 % 2,071,221 20.2 % Premium taxes, fees, and assessments 289,268 2.2 % 249,267 2.5 % Losses and loss adjustment expense 1,532,293 11.5 % 862,009 8.4 % Total cost of revenues 4,755,583 35.6 % 3,182,497 31.1 % Gross margin 8,606,614 64.4 % 7,055,813 68.9 % Other Operating Expenses Employee costs 5,752,302 43.0 % 5,089,464 49.7 % Professional fees 259,535 1.9 % 315,455 3.1 % General and administrative 1,241,261 9.3 % 2,223,374 21.7 % Amortization 182,414 1.4 % 177,080 1.7 % Depreciation 87,855 0.7 % 29,143 0.3 % Total expenses 7,523,367 56.3 % 7,834,516 76.5 % Segment Income (Loss) from Operations 1,083,247 8.1 % (778,703 ) (7.6 %) Interest expense, net - - (2,009 ) (0.0 %) Other investment (loss) income (3,569,262 ) (26.7 %) 2,670,468 26.1 % Net (Loss) Income Attributable to Common Stockholders $ (2,486,015 ) (18.6 %) $ 1,889,756 18.5 % Comparison of Fiscal 2022 to Fiscal 2021.
The increase in depreciation and amortization expense is mainly due to the InfoWest and Go Fiber acquisitions as well as continued capital investments across all of our broadband businesses. 49 Table of Contents Results of Insurance Operations For the Years Ended December 31, 2023 2022 Amount As a % of Segment Operating Revenues Amount As a % of Segment Operating Revenues Operating Revenues Premiums earned $ 13,932,659 78.7 % $ 10,649,089 79.7 % Insurance commissions 1,884,007 10.6 % 2,050,838 15.3 % Investment and other income 1,889,225 10.7 % 662,270 5.0 % Total operating revenues 17,705,891 100.0 % 13,362,197 100.0 % Cost of Revenues Commissions paid 4,387,088 24.8 % 2,934,022 21.9 % Premium taxes, fees, and assessments 376,828 2.1 % 289,268 2.2 % Losses and loss adjustment expense 2,044,251 11.6 % 1,532,293 11.5 % Total cost of revenues 6,808,167 38.5 % 4,755,583 35.6 % Gross margin 10,897,724 61.5 % 8,606,614 64.4 % Other Operating Expenses Employee costs 6,500,480 36.7 % 5,752,302 43.0 % Professional fees 596,245 3.4 % 259,535 1.9 % General and administrative 1,970,121 11.1 % 1,241,261 9.3 % Depreciation 152,388 0.9 % 87,855 0.7 % Amortization 160,246 0.9 % 182,414 1.4 % Total expenses 9,379,480 53.0 % 7,523,367 56.3 % Segment Income from Operations 1,518,244 8.5 % 1,083,247 8.1 % Other investment income (loss) 538,621 3.1 % (3,569,262 ) (26.7 %) Net Income (Loss) Attributable to Common Stockholders $ 2,056,865 11.6 % $ (2,486,015 ) (18.6 %) Comparison of Fiscal 2023 to Fiscal 2022.
The interest expense under our term loan is fixed at 4.00% per annum. 47 Table of Contents Results of Broadband Operations For the Years Ended December 31, 2022 2021 Amount As a % of Segment Operating Revenues Amount As a % of Segment Operating Revenues Operating Revenues Broadband revenues $ 28,627,271 100.0 % $ 15,234,266 100.0 % Cost of Revenues Network operations and data costs 4,319,410 15.1 % 2,134,938 14.0 % Programming costs 90,139 0.3 % 99,868 0.7 % Cell site rent and utilities 1,111,487 3.9 % 594,984 3.9 % Other costs of revenues 2,017,465 7.0 % 483,970 3.2 % Total cost of revenues 7,538,501 26.3 % 3,313,760 21.8 % Gross margin 21,088,770 73.7 % 11,920,506 78.2 % Other Operating Expenses Employee costs 10,892,844 38.1 % 5,754,642 37.8 % Professional fees 659,025 2.3 % 759,713 5.0 % General and administrative 5,166,722 18.1 % 2,183,466 14.3 % Amortization 2,617,966 9.1 % 943,717 6.2 % Depreciation 3,869,994 13.5 % 1,870,184 12.3 % Accretion 10,260 0.0 % 13,771 0.0 % Loss on disposition of assets 113,885 0.4 % 3,657 0.0 % Total expenses 23,330,696 81.5 % 11,529,150 75.6 % Segment (Loss) Income from Operations (2,241,926 ) (7.8 %) 391,356 2.6 % Interest expense, net (19,831 ) (0.1 %) (11,852 ) (0.1 %) Noncontrolling interest in subsidiary income (436,648 ) (1.5 %) (374,095 ) (2.5 %) Net (Loss) Income Attributable to Common Stockholders $ (2,698,405 ) (9.4 %) $ 5,409 0.0 % Comparison of Fiscal 2022 to Fiscal 2021.
Treasury securities. 48 Table of Contents Results of Broadband Operations For the Years Ended December 31, 2023 2022 Amount As a % of Segment Operating Revenues Amount As a % of Segment Operating Revenues Operating Revenues Broadband revenues $ 35,340,502 100.0 % $ 28,627,271 100.0 % Cost of Revenues Network operations and data costs 5,181,917 14.7 % 4,319,410 15.1 % Programming costs 61,646 0.2 % 90,139 0.3 % Cell site rent and utilities 1,597,681 4.5 % 1,111,487 3.9 % Other costs of revenues 3,114,274 8.8 % 2,017,465 7.0 % Total cost of revenues 9,955,518 28.2 % 7,538,501 26.3 % Gross margin 25,384,984 71.8 % 21,088,770 73.7 % Other Operating Expenses Employee costs 14,527,407 41.1 % 10,892,844 38.1 % Professional fees 823,969 2.3 % 659,025 2.3 % General and administrative 7,093,277 20.1 % 5,166,722 18.1 % Depreciation 6,816,929 19.3 % 3,869,994 13.5 % Amortization 3,316,403 9.4 % 2,617,966 9.1 % Accretion 17,290 0.0 % 10,260 0.0 % (Gain) loss on disposition of assets (122,418 ) (0.3 %) 113,885 0.4 % Total expenses 32,472,857 91.9 % 23,330,696 81.5 % Segment Loss from Operations (7,087,873 ) (20.1 %) (2,241,926 ) (7.8 %) Interest income (expense), net 17,664 0.1 % (19,831 ) (0.1 %) Noncontrolling interest in subsidiary loss (income) 75,008 0.2 % (436,648 ) (1.5 %) Net Loss Attributable to Common Stockholders $ (6,995,201 ) (19.8 %) $ (2,698,405 ) (9.4 %) Comparison of Fiscal 2023 to Fiscal 2022.
The decrease is mainly due to a $900,000 reduction of the contingent consideration related to the ACS acquisition as well as lower IT system implementation related expenses. ● During fiscal 2022, our segment income from insurance operations of $1,083,247 was more than offset by other investment losses of $3,569,262 mainly from unrealized losses on our investments in publicly held securities.
The increase is mainly due to a $900,000 reduction in general and administrative expenses during the fourth quarter of fiscal 2022 related to finalizing the ACS acquisition contingent consideration. ● During fiscal 2023, our segment income from insurance operations of $1,518,244 was increased by other investment income of $538,621 mainly from unrealized gains on our investments in publicly held securities.
The shares were sold in the offering pursuant to the Company’s universal shelf registration statement on Form S-3ASR (File No. 333-254870) that was declared effective on March 30, 2021, which we refer to as the “2021 Shelf Registration Statement.” The 2021 Shelf Registration Statement expired on March 28, 2022 upon the filing of our 2021 Annual Report on Form 10-K as we no longer qualified as a well-known seasoned issuer. 2022 Shelf Registration Statement In April 2022, we filed a shelf registration statement on Form S-3 (File No. 333-264470) that was declared effective on May 11, 2022, which we refer to as the “2022 Shelf Registration Statement,” relating to the registration of Class A common stock, preferred stock, par value $0.001 per share, which we refer to as “preferred stock,” debt securities and warrants of the Company for up to $500 million.
As described below, we may raise additional funds through our shelf registration statement allowing us to raise up to $500 million through the sale of securities to fund future acquisitions and investments. 52 Table of Contents 2022 Shelf Registration Statement In April 2022, we filed a shelf registration statement on Form S-3 (File No. 333-264470) that was declared effective on May 11, 2022, which we refer to as the “2022 Shelf Registration Statement,” relating to the registration of Class A common stock, preferred stock, par value $0.001 per share, which we refer to as “preferred stock,” debt securities and warrants of the Company for up to $500 million.
For fiscal 2022 and fiscal 2021, our revenues in dollars and as a percentage of total revenues were as follows: For the Years Ended December 31, 2022 2021 2022 vs 2021 Amount As a % of Total Revenues Amount As a % of Total Revenues $ Variance Revenues: Billboard rentals, net $ 39,244,726 48.3 % $ 31,499,235 55.3 % $ 7,745,491 Broadband services 28,627,271 35.3 % 15,234,266 26.7 % 13,393,005 Premiums earned 10,649,089 13.1 % 7,686,400 13.5 % 2,962,689 Insurance commissions 2,050,838 2.5 % 2,212,849 3.9 % (162,011 ) Investment and other income 662,270 0.8 % 339,061 0.6 % 323,209 Total Revenues $ 81,234,194 100.0 % $ 56,971,811 100.0 % $ 24,262,383 We realized total revenues of $81,234,194 during fiscal 2022, an increase of 42.6% over revenues of $56,971,811 during fiscal 2021.
For fiscal 2023 and fiscal 2022, our revenues in dollars and as a percentage of total revenues were as follows: For the Years Ended December 31, 2023 2022 2023 vs 2022 Amount As a % of Total Revenues Amount As a % of Total Revenues $ Variance Revenues: Billboard rentals, net $ 42,940,369 44.6 % $ 39,244,726 48.3 % $ 3,695,643 Broadband services 35,340,502 36.7 % 28,627,271 35.3 % 6,713,231 Premiums earned 13,932,659 14.5 % 10,649,089 13.1 % 3,283,570 Insurance commissions 1,884,007 2.0 % 2,050,838 2.5 % (166,831 ) Investment and other income 2,156,199 2.2 % 662,270 0.8 % 1,493,929 Total Revenues $ 96,253,736 100.0 % $ 81,234,194 100.0 % $ 15,019,542 We realized total revenues of $96,253,736 during fiscal 2023, an increase of 18.5% over revenues of $81,234,194 during fiscal 2022.
The increase is mainly driven by the InfoWest and Go Fiber acquisitions as well as our FFH business. ● Employee costs in fiscal 2022 increased by 89.3% from fiscal 2021.
The increase is mainly driven by the InfoWest and Go Fiber acquisitions as well as an increase in sales commissions and fuel costs within Other costs of revenues. ● Employee costs in fiscal 2023 increased by 33.4% from fiscal 2022.
Investments : ● Since September 2015, we have made a series of investments in commercial real estate, a commercial real estate management, brokerage and related services business as well as an asset management business. We currently own 30% of Logic and approximately 49.9% of 24th Street Holding Company, LLC, both directly and indirectly through our ownership in Logic.
We hope to continue to expand in Arizona, Florida, Nevada, Utah, and other locales. Investments : ● Since September 2015, we have made a series of investments in commercial real estate, a commercial real estate management, brokerage and related services business as well as an asset management business. We currently own 30% of Logic.
The increase was mainly driven by the InfoWest and Go Fiber acquisitions, our FFH business, and the Keleher and Missouri Neon acquisitions, which were partially offset by a $900,000 reduction of the contingent consideration related to the ACS acquisition. ● Non-cash expenses in fiscal 2022 included $8,649,066 in depreciation expense, $6,474,791 in amortization expense, and $206,359 in accretion expense related to asset retirement obligations for certain billboard and broadband assets.
The increase was mainly driven by the InfoWest and Go Fiber acquisitions, higher marketing and software related expenses within our broadband businesses, continued hiring within BOAM, and a $900,000 reduction of the contingent consideration related to the ACS acquisition during the fourth quarter of fiscal 2022. ● Non-cash expenses in fiscal 2023 included $12,155,096 in depreciation expense, $7,409,939 in amortization expense, and $216,501 in accretion expense related to asset retirement obligations for certain billboard and broadband assets.
At December 31, 2022, we had approximately $25 million in unrestricted cash and $34 million in short-term treasury securities.
At December 31, 2023, we had approximately $22 million in unrestricted cash and $18 million in short-term treasury securities (excludes $29 million of short-term treasury securities held by funds consolidated by BOAM).
The decrease in net loss from operations in dollars was primarily due to the management bonus payments in fiscal 2021, improved operations within our billboard business and insurance business, lower professional fees at Boston Omaha, and net income from operations generated by the InfoWest and Go Fiber acquisitions, which were partially offset by costs associated with our FFH business and our asset management business.
The increase in net loss from operations in dollars was primarily due to an increase in depreciation and amortization expense related to our InfoWest and Go Fiber acquisitions and capital investments within our other broadband businesses as well as costs associated with hiring within our broadband and asset management businesses, which were partially offset by improved operations within our billboard and insurance businesses.
For fiscal 2022 and fiscal 2021, our expenses in dollars and as a percentage of total revenues were as follows: For the Years Ended December 31, 2022 2021 2022 vs 2021 Amount As a % of Total Revenues Amount As a % of Total Revenues $ Variance Costs and Expenses: Cost of billboard revenues $ 14,395,627 17.7 % $ 12,094,834 21.2 % $ 2,300,793 Cost of broadband revenues 7,538,501 9.3 % 3,313,760 5.8 % 4,224,741 Cost of insurance revenues 4,755,583 5.9 % 3,182,497 5.6 % 1,573,086 Employee costs 26,343,272 32.4 % 34,245,526 60.1 % (7,902,254 ) Professional fees 5,300,275 6.5 % 7,703,901 13.5 % (2,403,626 ) General and administrative 12,861,992 15.8 % 9,756,257 17.1 % 3,105,735 Amortization 6,474,791 8.0 % 4,549,608 8.0 % 1,925,183 Depreciation 8,649,066 10.6 % 5,579,026 9.8 % 3,070,040 (Gain) loss on disposition of assets (61,377 ) (0.1 %) 178,911 0.3 % (240,288 ) Accretion 206,359 0.3 % 134,360 0.3 % 71,999 Total Costs and Expenses $ 86,464,089 106.4 % $ 80,738,680 141.7 % $ 5,725,409 During fiscal 2022, we had total costs and expenses of $86,464,089, as compared to total costs and expenses of $80,738,680 in fiscal 2021.
For fiscal 2023 and fiscal 2022, our expenses in dollars and as a percentage of total revenues were as follows: For the Years Ended December 31, 2023 2022 2023 vs 2022 Amount As a % of Total Revenues Amount As a % of Total Revenues $ Variance Costs and Expenses: Cost of billboard revenues $ 15,136,817 15.7 % $ 14,395,627 17.7 % $ 741,190 Cost of broadband revenues 9,955,518 10.3 % 7,538,501 9.3 % 2,417,017 Cost of insurance revenues 6,808,167 7.1 % 4,755,583 5.9 % 2,052,584 Employee costs 32,561,929 33.8 % 26,343,272 32.4 % 6,218,657 Professional fees 4,665,515 4.9 % 5,300,275 6.5 % (634,760 ) General and administrative 16,112,243 16.8 % 12,861,992 15.8 % 3,250,251 Depreciation 12,155,096 12.6 % 8,649,066 10.6 % 3,506,030 Amortization 7,409,939 7.7 % 6,474,791 8.0 % 935,148 Accretion 216,501 0.2 % 206,359 0.3 % 10,142 Loss (gain) on disposition of assets 84,414 0.1 % (61,377 ) (0.1 %) 145,791 Total Costs and Expenses $ 105,106,139 109.2 % $ 86,464,089 106.4 % $ 18,642,050 During fiscal 2023, we had total costs and expenses of $105,106,139, as compared to total costs and expenses of $86,464,089 in fiscal 2022.
These items were partially offset by improved cash flow generation within our billboard and insurance businesses as well as positive operating cash flow impact from the InfoWest and Go Fiber acquisitions. Net Cash Provided by (Used in) Investing Activities .
The increase in net cash provided by operating activities was mainly driven by improved cash flow generation within our billboard and insurance businesses, positive operating cash flow impact from the InfoWest and Go Fiber acquisitions, and the 2021 bonus payments under our Management Incentive Bonus Plan, which totaled $15,000,000 and were paid in January 2022.
Key assumptions utilized in estimating the future cash flows expected to be generated by each reporting unit primarily relate to forecasted revenues and premiums earned.
Key assumptions utilized in estimating the future cash flows expected to be generated by each reporting unit primarily relate to forecasted revenues and premiums earned. Goodwill Goodwill represents future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Goodwill is subject to an annual impairment test.
We have bought parcels of land in Nevada which we hope to develop or repurpose for other uses. We have provided approximately $15 million of capital to finance the initial stages of these projects and are currently in the process of seeking to raise third party capital to be invested alongside our capital.
We invested approximately $15 million of capital to finance the initial acquisitions for these projects and subsequently raised third-party capital to be invested alongside our capital. The BFR Fund acquired land parcels in Nevada with the initial plan to develop, construct, and operate build-for-rent communities.
Net cash provided by investing activities was $87,862,907 during fiscal 2022 as compared with net cash used in investing activities of $45,670,808 during fiscal 2021.
These items were partially offset by operating costs within our FFH business and our asset management business. Net Cash (Used in) Provided by Investing Activities . Net cash used in investing activities was $64,252,691 during fiscal 2023 as compared with net cash provided by investing activities of $87,862,907 during fiscal 2022.
The increase as a percent of revenues is mainly due to the InfoWest and Go Fiber acquisitions and our FFH business. ● Depreciation and amortization expense increased by $1,999,810 and $1,674,249, respectively, from fiscal 2021.
The increase is mainly due to the InfoWest and Go Fiber acquisitions as well as higher marketing and software related expenses. ● Depreciation and amortization expense increased by $2,946,935 and $698,437, respectively, from fiscal 2022.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeItem 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 41 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 59 Item 8. Financial Statements and Supplementary Data. 59 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. 59 Item 9A. Controls and Procedures. 60
Biggest changeItem 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 42 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 61 Item 8. Financial Statements and Supplementary Data. 61 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. 61 Item 9A. Controls and Procedures. 62

Other BOC 10-K year-over-year comparisons